2026 Housing Market ‘Reset’: What It Means For Buyers, Sellers And Renters

The U.S. housing market should experience a recalibration in 2026 with slow, modest price growth and improving affordability as mortgage rates stabilize and inventory rises, according to several recent forecasts.

The National Association of Realtors expects home sales to rise by 14 percent in 2026 due to a combination of factors, including mortgage rate stabilization, that will qualify more buyers.

At the same time, sale prices are expected to increase, but only minimally, at a rate of 2 percent to 3 percent, the trade association for licensed Realtors said. Wage growth is generally above that, making it a wash for homebuyers.

“So, it’s a year where people’s income begins to rise a little faster than consumer price inflation and home prices — and this is a welcoming development,” NAR economist Lawrence Yun said in a news release.

The housing inventory is about 20 percent higher than a year ago, relieving pressure on buyers to act quickly.

“We’re not back to the pre-COVID inventory yet, which I would consider normal, so we’re still in a slight housing shortage condition,” Yun said. “But consumers do not have to rush to decisions the way they did before — there are more choices out there and less prevalence of multiple offers.”

Income Growth Outpaces Inflation

Realtor.com’s 2026 forecast is similar, with predictions that house prices will increase by about 2.2 percent, adding to a 2.0 gain last year.

The average 30-year mortgage rate is projected to be 6.3 percent in 2026, a slight decrease from 6.6 percent in 2025, according to the forecast. This rate drop and stable income growth is expected to improve affordability, bringing the typical mortgage payment share of income to 29.3 percent — the first drop below the 30 percent affordability benchmark since 2022. Additionally, rent prices are forecast to decline by 1 percent by the end of 2026.

“After a challenging period for buyers, sellers and renters, 2026 should offer a welcome, if modest, step toward a healthier housing market,” Danielle Hale, the online real estate company’s chief economist, said in a news release.

Hale said incomes are growing faster than inflation and that, along with lower mortgage rates, are making houses more affordable.

New Housing Starts Stunted

Two other internet-based real estate companies, Zillow and Redfin, were more conservative in their projections on price growth, the rise in median home sale prices of 1.2 percent and 1 percent, respectively.

Zillow also expects the number of major markets where prices have been declining to shrink from 24 in October to 12 in 2026.

The company projects 4.26 million sales of existing houses next year, a 4.3 percent increase over 2025, as improving affordability brings demand back to the market.

At the same time, 2026 is shaping up to be the slowest year for new single-family home construction since 2019, following a notably weak year in 2025, the company said.

“Because there’s a large stock of new homes already built and others still under construction, builders are expected to hold back on starting new projects,” Zillow said.

New single-family housing starts were down 5 percent from 2024 as of August. A further drop of 2 percent in 2026 would put starts below the 2023 low of 947,000 starts.

“Expect builders to continue leaning heavily on incentives such as rate buy downs to keep inventory moving, particularly in markets where affordability remains tight,” Zillow said.

Affordability At 3-Year Best

Neither Zillow nor Redfin anticipates much change in mortgage rates in 2026 following a decrease in rates in late 2025 after the Federal Reserve made cuts to its benchmark rate.

Those cuts pushed affordability to a three-year best, Zillow noted, adding that “gradual rate moderation should help more buyers reenter the market, even if ultralow pandemic-era rates remain far out of reach.”

Redfin said mortgage rates may dip below 6 percent occasionally, but not for any meaningful amount of time because of lingering inflation risk. The company’s economists don’t expect a leadership change at the central bank later this year to bring significantly lower mortgage rates, as bond markets set long-term rates.

“Prices will tick up only marginally because still-high mortgage rates and prices, along with a weaker economy, will curb demand,” Redfin said in a news release.

Overall, though, wage growth will outpace price increases for a sustained period for the first time since the pandemic, making home buying more affordable, Redfin said, adding, “The small price increase combined with mortgage rates dipping lower than they were in 2025 means monthly housing payments will grow slower than wages, too.”

Not All Markets Are Equal

In its forecast, Redfin said commuters will drive housing markets in the New York City; the Midwest and Great Lakes are appealing due to affordability and lower risk of climate disasters; and small and mid-sized cities attract graduates with affordable rent and stable careers in skilled trades, as AI limits entry-level white-collar jobs.

Along with Long Island, the Hudson Valley, northern New Jersey and Fairfield, Connecticut, other housing markets expected to heat up in 2026 include Syracuse, New York; Cleveland; St. Louis; Minneapolis; and Madison, Wisconsin.

Home sales are expected to stagnate in areas at high risk of natural disasters, high insurance rates, and the return of remote workers to the office. Those markets include Nashville, Tennessee; San Antonio; Austin, Texas; Fort Lauderdale, Florida; West Palm Beach, Florida; and Miami.

More Families Are Renting

Redfin called 2026 the year of “the great housing reset,” a years-long period of gradual increases in home sales and normalization of prices as affordability gradually improves.”

“It won’t be enough to make home buying affordable in the short run for Gen Zers and young families, who will be forced to make tradeoffs, from moving in with roommates or their parents to delaying having children,” Redfin said.

Both Zillow and Redfin noted in their forecasts that many families are putting off buying a home, which is driving up rental costs.

About 37 percent of renters have a child younger than 18 in the home, up from 33 percent a year ago, according to the Zillow Consumer Housing Trends Report. Accordingly, the company expects rental costs of a single-family home to increase by about 2.3 percent.

“With parents making up roughly one-third of today’s apartment shoppers, buildings that offer family-friendly amenities like ‘imagination centers’ or ‘homework pods’ will be better positioned to compete,” Zillow said.

Redfin expects rents to rise nationwide by 2 percent to 3 percent, roughly the pace of inflation, as demand for apartments rises and supply falls.

Apartment construction slowed from a 2021-2022 surge and is expected to continue slowing, Redfin said.

“At the same time,” the company said, “many Americans are renting instead of buying because down payments and monthly mortgage payments are expensive.”

Hale, the Realtor.com economist, also expects renters to see some price relief from pandemic highs.

“It’s not a dramatic reset, but it’s a meaningful shift that moves the market back toward balance,” Hale said.