Economic Forecast for 2026 Housing Market: Possible Crash or Prosperity?
2026 Housing Market Outlook: Moderate Growth and Increased Sales
The housing market in 2026 is set to take a more stable turn, with a forecast of slower price growth and a larger selection of properties for sale. This shift is based on predictions from various industry experts, including the National Association of Home Builders (NAHB) and Fannie Mae.
Home Prices:
Annual home price growth is projected to be modest, with Fannie Mae predicting a 1.1% increase in 2026, a decrease from earlier estimates. This indicates a slow but steady appreciation, rather than a price crash or rapid escalation. The National Association of Realtors (NAR) expects median home prices to rise about 4% in 2026, while Berkshire Hathaway anticipates home prices to increase but at a more gradual pace, due to rising inventory.
Mortgage Rates:
Mortgage rates, which hovered around mid-6% in 2025, are forecasted to edge slightly lower, around 6.0% to 6.1% by late 2026, according to Fannie Mae and industry experts. However, significant relief in rates may not materialize until beyond 2026. The Federal Reserve’s actions maintaining interest rates around 4.25%-4.5% have instilled cautious optimism for a modest easing of mortgage rates in 2026. Berkshire Hathaway notes that mortgage rates will likely remain in the mid-6% range, with only moderate improvement.
Sales Activity:
Total home sales are forecasted to increase, with Fannie Mae projecting about 5.35 million units sold in 2026, up from 4.85 million in 2025. The NAR expects existing home sales to increase by 11% in 2026 and new home sales to rise 5%. The rising inventory levels, which currently stand at around a 9.8-month supply, are expected to support increased buyer activity and encourage price adjustments.
Contextual factors include rising home inventory and slower sales pace through mid-2025, which have pushed sellers to reduce prices on a significant share of listings, helping buyer affordability and market balance. Affordability challenges remain a concern, with limited affordable inventory continuing to pressure some buyers, though modestly lower mortgage rates could improve access.
In summary, the 2026 housing market is expected to be characterized by moderate home price growth, slightly easing but still elevated mortgage rates, and an uptick in sales activity, driven by increased inventory and cautious buyer optimism rather than dramatic shifts.
Investors could find opportunities in 2026 with adjustable-rate mortgages and efficient property management becoming more important. The U.S. News Housing Market Index predicts prices will increase 17% from 2024 to 2029, with a slow annual increase starting in 2026. The U.S. News Housing Market Index estimates there are still 4.5 million houses short, a problem that is expected to slowly improve between 2025 and 2030. For sellers in 2026, there may not be as much money earned compared to a few years ago, but there will still be buyers. Zillow economists project U.S. home prices to fall -1.7% between March 2025 and March 2026.
It is always recommended to consult with a real estate professional in your area before making big decisions.
- Moderate home price growth is projected for the real estate market in 2026, according to the National Association of Realtors (NAR), with an expected increase of about 4%.
- The growing inventory in the housing market will likely encourage price adjustments and support increased sales activity, leading to a larger selection of properties.
- In the face of rising mortgage rates and continued affordability challenges, adjustable-rate mortgages may present opportunities for investors in the real-estate industry.
- The U.S. News Housing Market Index estimates there is still a shortage of 4.5 million houses, a problem that is expected to slowly improve between 2025 and 2030.
- Efficient property management will become essential for investors seeking to maximize returns in the 2026 real-estate market.
- With a broad spectrum of advisors available, it's crucial for investors to consult with a local real estate expert before making significant decisions regarding their portfolio, finance, or tax planning related to the housing-market outlook in 2026.
