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Realtor.com® 2026 Housing Forecast: A Step Towards Stability

Realtor.com® has unveiled its forecast for the 2026 housing market, suggesting a period of careful stabilization following years of volatility. After grappling with affordability issues, scant inventory, and significant declines in market activity, the outlook indicates a promising shift.

Gradual Improvement in Market Conditions

The forecast highlights that as mortgage rates ease, and incomes see an uptick, conditions for buyers will progressively improve. Specifically, it anticipates that the average 30-year mortgage rate will stabilize around 6.3% in 2026, a slight decrease from 6.6% in 2025. This decline in rates, combined with rising incomes, is expected to ease the affordability crisis, allowing more buyers to enter the market. The projection also notes that the typical mortgage payment—relative to income—will fall to 29.3%, representing the first dip below the 30% threshold since 2022.

In terms of overall affordability, declining rental prices across the nation will add relief for renters, particularly those in markets that recently faced steep rental costs. Nationally, rent prices are forecasted to decrease by 1%, offering some much-needed respite from the pandemic-induced spikes.

Market Dynamics: Inventory and Sales Growth

Realtor.com® anticipates an 8.9% increase in existing home inventory for 2026—continuing the upward trajectory observed over the past two years. This increase helps foster a balanced market dynamic by ensuring that supply growth outpaces sales, which are projected to grow by 1.7% year over year, reaching approximately 4.13 million.

However, it’s important to note that sales figures remain historically low, reflective of lingering challenges such as the lock-in effect. A significant portion of homeowners currently benefits from mortgage rates below 6%, which diminishes their motivation to sell unless compelled by life changes.

Home Prices: Trends and Challenges

Home prices are anticipated to rise by 2.2% in 2026, building on a 2.0% increase from 2025. Despite this nominal growth, inflation is projected to accelerate, which will effectively result in a slight decline in real, inflation-adjusted home prices for the second consecutive year. This scenario provides buyers with a rare window of opportunity in an otherwise tight market.

Hale emphasizes that while the improvements in affordability are modest, they signify important progress for buyers who have faced a persistently challenging market. A balanced market creates opportunities for individuals seeking homes amidst rising mortgage costs and competitive sales.

Rethinking Rental Markets

With the anticipated decline of national rent prices, particularly in regions like the South and West, renters should find it easier to manage housing expenses. The construction of new multifamily homes is anticipated to significantly contribute to the easing supply in these markets. By the end of 2026, vacancy rates could align with historical averages, creating a more favorable environment for renters. Yet, markets with high-density and elevated costs, such as New York City, may not experience the same relief.

Navigating Economic Risks

While the forecast for a healthier housing environment exists, it is accompanied by economic uncertainties that could jeopardize progress. Policy uncertainties regarding fiscal measures could tremble consumer sentiment and affect inflation dynamics. Additionally, changes in Federal Reserve policy, whether tightening or easing too rapidly, can alter the housing landscape.

In conclusion, Realtor.com's forecast indicates a gradual progression toward a more balanced and stable housing market. Although significant hurdles remain, the easing of mortgage rates and slight enhancements in affordability have set the stage for a more welcoming environment for both buyers and sellers entering 2026. As Danielle Hale notes, it’s not merely a reset; it’s a substantial shift towards balance, vital for the housing sector's recovery.