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ealtor.com’s 2026 Housing Forecast projects a modest, steady rebound for the U.S. housing market. Mortgage rates are expected to ease slightly to an average of 6.3% for 30‑year loans, down from 6.6% in 2025. Coupled with continued wage growth, this should lift the typical mortgage payment to 29.3% of median household income—below the 30% threshold for the first time since 2022. National rents are projected to fall 1% by year‑end.
Home prices are forecast to rise 2.2% in 2026, following a 2% gain in 2025. However, inflation—anticipated to climb over 3%—will outpace nominal price growth, causing real prices to decline for a second consecutive year. This inflation‑adjusted dip gives buyers more breathing room even as headline prices inch higher.
Key 2026 projections
* 30‑year mortgage rates: 6.3% average, stabilizing after a volatile 2025 as Fed tightening ends and growth slows.
* Home prices: 2.2% nominal rise; real prices fall slightly again.
* National rents: 1% decline, with sharper drops in the South and West.
* Active inventory: up 8.9%, marking a third straight year of growth.
* Single‑family starts: 3.1% increase to about 1 million units.
* Existing‑home sales: 1.7% rise to 4.13 million, still historically weak.
* Affordability: payment‑to‑income ratio falls to 29.3%.
* Market balance: 4.6 months of supply on average.
Inventory recovery enters its third year. Listings are expected to climb nearly 9% in 2026, narrowing the pre‑pandemic deficit to about 12% by year‑end—an improvement from 19% in 2025 and 30% in 2024. With supply outpacing demand, the national market should hold roughly 4.6 months of inventory, a level that still falls short of the six‑month benchmark that signals a buyer’s market but enough to shift modest bargaining power toward purchasers. Younger and first‑time buyers will continue to face affordability constraints.
Home prices will rise nominally, but inflation will erode those gains. Consumer prices are projected to climb more than 3%, outpacing the 2.2% rise in home values, leading to a second straight year of real price declines. The combination of lower rates, rising incomes, and slower home‑price appreciation should deliver one of the first meaningful affordability improvements since 2022. The typical monthly payment on a median‑priced home is expected to fall 1.3% from 2025.
Renters will benefit from a surge in multifamily completions, pushing vacancy rates toward or above the long‑term 7.2% average. National rents are projected to decline 1% in 2026, with sharper drops likely in the South and West, where construction pipelines have been heaviest. High‑cost, high‑density markets such as New York City will remain outliers, with rents staying elevated and affordability still strained.
Existing‑home sales are forecast to rise 1.7% next year, reaching 4.13 million transactions—one of the weakest tallies in nearly three decades. Despite marginal improvement, the lock‑in effect remains a critical drag. Roughly 80% of mortgage borrowers still carry rates below 6%, giving homeowners little incentive to sell unless compelled by major life events. That dynamic is expected to persist well into 2026, keeping turnover depressed even as underlying conditions improve.
Policy and economic risks
The housing outlook remains vulnerable to several macro risks. Policy uncertainty—especially around trade and fiscal measures—could influence inflation, while an unexpected Fed shift remains a major wildcard. A cooling labor market could dampen spending and housing demand, and renewed inflation pressure from tariffs, energy markets or supply‑chain disruptions could lift mortgage rates again. While a recession is not the base case, the economy remains in a sensitive transition period. Any policy misstep or deterioration in consumer sentiment could disrupt the sector’s slow march back toward normality.
