Gradual affordability gains, not a boom, are expected to define 2026
Economists across the housing industry largely converges on the same story for 2026: a market that finally moves off the extremes of the pandemic era, but stops well short of a true buyer’s paradise.
Prices and mortgage rates are still elevated, yet a mix of rising incomes, slightly softer borrowing costs and more inventory point to what one brokerage frames as a long “reset” rather than a reckoning.
Redfin projected that incomes would rise faster than home prices for the first sustained stretch since the financial crisis, with the median US home-sale price up just 1% in 2026 as “still-high mortgage rates and prices, along with a weaker economy” kept demand in check.
At the same time, it expects existing-home sales to finish the year about 3% higher, at an annualized 4.2 million.
Zillow calls 2026 a year of “steadier footing,” forecasting that US home values would rise 1.2% after a flat 2025 and that existing-home sales would climb 4.3% to 4.26 million as “years of limited inventory and high mortgage rates” gave way to slightly better affordability and some release of pent-up demand.
“The housing market is finally settling into a healthier state, with buyers and sellers starting to return,” Zillow chief economist Mischa Fisher said.
“Each group should have a bit more breathing room in 2026.”
Despite that breathing room, most forecasters still see the 30-year fixed rate holding around the low-to-mid 6% range. Redfin expects an average near 6.3% in 2026, while Realtor.com also put the typical rate around 6.3% and Fannie Mae’s baseline called for 5.9% by year-end.
Realtor.com said “incomes climbing faster than inflation as mortgage rates steady at a lower level create space for affordability to improve,” and projected that the typical mortgage-payment share of income would slip to 29.3%, below the 30% threshold for the first time since 2022.
First American chief economist Mark Fleming argues that the crucial shift lies in the gap between wages and prices. “An important dynamic for affordability is that household income is expected to rise faster than house prices next year,” Fleming said, pointing to a “roughly 3% improvement in affordability” between late 2025 and late 2026 that would “return affordability to levels not seen since the summer of 2022.”
He cautioned, however, that affordability remains “about two thirds weaker than the pre pandemic five year average,” a reminder that any relief would be relative.
Consumer sentiment remains uneasy. A Clever Offers survey found that four in 10 buyers and sellers who plan to transact in 2026 worry about a real estate crash, even as 86% believes it would be a good time to move.
Roughly 55% expects a recession or depression, and about 40% said they were worried they would not be able to afford their housing payments in 2026. Nearly all respondents said they intend to cut discretionary spending to shore up household finances.
Buyers, renters and “lifestyle” choices
Even in that cautious climate, demand has not disappeared so much as it has shifted.
A RE/MAX poll of would-be purchasers found that 88% are “very” or “somewhat” likely to buy in 2026, with 71% saying current conditions have delayed, not derailed, their plans.
“Today’s buyers aren’t just looking for a house – they’re looking for a sense of community,” RE/MAX chief growth officer Chris Lim said, adding that “lifestyle and connection are just as important as the property itself.”
Zillow’s 2026 outlook underscores the rise of the “lifestyle renter” who opt to lease for flexibility and lower maintenance, even when they could qualify to buy.
Multifamily rents are expected to rise just 0.3% next year, Zillow said, allowing earnings to catch up in most big metros, with New York City a notable exception.
In parallel, sentiment research cited by Knightvest Capital suggests that “renting is no longer a temporary compromise but a deliberate, lifestyle decision,” as more households embrace long-term apartment living.
A patchwork of prices and a grind for mortgage pros
Redfin expects a 1% national gain in 2026, Realtor.com puts the figure at 2.2%, Zillow at 1.2% and Fannie Mae at 1.3%.
Realtor.com data points to double-digit declines in some overheated Sun Belt markets, led by Cape Coral–Fort Myers, Florida, where prices are projected to fall more than 10%, and North Port–Sarasota–Bradenton, Florida, where prices are forecast to drop just under 9%.
Industry forecasts also signaled that 2026 would reward execution more than exuberance. Fannie Mae’s Economic and Strategic Research Group cut its 2026 home-sales outlook to a 7.3% increase, from nearly 9% earlier, even as it anticipated total single-family originations would grow to about $2.34 trillion on the back of stronger refinance activity.
Redfin projected that US refinance volume would rise more than 30% to roughly $670 billion, noting that “strong home-value appreciation over the last several years” has left the typical mortgaged homeowner with about $181,000 in untapped equity as of mid 2025.
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