What 2026 could hold for the housing market
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For 2026, expect lower mortgage rates but a still-tough housing market.
Why it matters: Homes remain unaffordable for many, especially younger people.
Here's what industry economists predict is in store for rates, sales and more next year.
Rates will stay above 6%
U.S. mortgage rates are expected to hover near 6.3% in 2026, according to Realtor.com chief economist Danielle Hale.
- Redfin also projects 30-year fixed rates will average 6.3%, dipping from 6.6% in 2025 while staying well above pandemic-era levels.
What we're hearing: "A lot of the challenges that the housing market has been grappling with — the lack of affordability and the 'lock-in effect' on existing homeowners — are still going to be present in 2026, but the grip is kind of loosening," Hale tells Axios.
The big picture: Cheaper monthly payments could lift home sales, even if they won't move the needle for every buyer as economic uncertainty and other costs loom large.
- Realtor.com predicts sales of existing homes will climb by 1.7% next year. Redfin predicts a 3% bump.
Also offering shoppers some relief: Wages are expected to grow faster than home prices, which will rise another 1% in 2026, per Redfin's forecast.
- The median price of a home sold in the U.S. in the second quarter was $410,800, federal data shows, up 27% from the same time in 2019, before the housing market went haywire.
More roommates, fewer babies
High housing costs may be reshaping U.S. households.
- Think: More adult children living with their parents (and vice versa), smaller families and more friends buying homes together, "often with prenup-style agreements," according to Redfin researchers.
Between the lines: "Entry-level inventory remains tight, limiting options for first-time buyers," says Selma Hepp, chief economist at Cotality, an industry data provider.
What we're watching: "Renovations that create space for multiple generations are becoming increasingly common" — from garage conversions to separate suites for adult kids or aging parents — as "families rethink the homes they already have," Redfin chief economist Daryl Fairweather tells Axios.
Tale of two markets persists
A regional divide in the housing market isn't going away in 2026.
Catch up quick: Home prices are rising faster in the Northeast and Midwest, where there's less newly built housing.
The latest: Northeastern and Midwestern metros now dominate Realtor.com's annual ranking of the top housing markets for 2026. That's a big shift from a year ago, when the top 10 were exclusively in the South and West.
- Hartford, Connecticut; Rochester, New York; and Worcester, Massachusetts lead the new list.
The bottom line: Prices will likely increase 3 to 4% in the Northeast and Midwest this year, "supported by tight inventory and strong labor markets," Hepp tells Axios.
- In the Sunbelt and West, prices are expected to cool further but remain above pre-pandemic levels.
