The forecast points to a combination of steady job growth, gradually declining mortgage rates, and more
The United States housing market could finally be poised for a comeback in 2026, with the National Association of REALTORS (NAR) projecting a 14% surge in existing-home sales after a stagnant 2025.
The forecast, delivered by NAR chief economist Lawrence Yun at the group’s annual forum, points to a combination of steady job growth, gradually declining mortgage rates, and persistent supply shortages as the key drivers behind the anticipated rebound.
“Next year is really the year that we will see a measurable increase in sales,” Yun said. “Home prices nationwide are in no danger of declining.”
NAR expects median home prices to climb 4% in 2026, following a 3% gain in 2025, with new-home sales also projected to rise 5% next year.
Nearly eight in 10 US metro areas saw home prices rise in the third quarter of 2025. The national median single-family existing-home price grew 1.7% year over year to $426,800, matching the annual pace seen in Q2.
Mortgage rates, which have hovered near 7% for much of this year, are expected to ease to an average of 6% in 2026.
The average 30-year fixed mortgage rate has slipped to its lowest level in 2025 so far, Freddie Mac said. Rate fell to 6.19% for the week ended October 23 compared with 6.27% the week before.
“As we go into next year, the mortgage rate will be a little bit better,” Yun said. “It’s not going to be a big decline, but it will be a modest decline that will improve affordability.”
He cautioned, however, that rates are unlikely to return to the ultra-low 3% levels seen during the pandemic, citing the influence of inflation, Treasury yields, and federal borrowing.
Mortgage application activity has already begun to pick up, with the Mortgage Bankers Association reporting a 31% year-over-year increase in purchase applications in the latest week.
Mortgage applications for new homes fell in October, but annual sales pace reached its strongest level in over a year.
“Mortgage applications have been consistently above last year, implying that people’s desire to enter the market has been consistently positive,” Yun said.
Mortgage applications increased 0.6% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 7, 2025.https://t.co/LkJuaxIsA0
— Mortgage Professional America Magazine (@MPAMagazineUS) November 12, 2025
Market divides widen as first-time buyers struggle
Despite the upbeat outlook, the recovery is expected to be uneven. “The upper end of the market has been doing much better than the lower end,” Yun said, pointing to robust inventory and strong financial markets driving activity in the $750,000 to $1 million range.
Meanwhile, first-time buyers remain squeezed by high prices, limited inventory, and rising debt burdens. According to NAR’s 2025 Profile of Home Buyers and Sellers, first-time buyers dropped to an all-time low of 21%, with a median age of 40.
“We have haves and have-nots,” NAR deputy chief economist Jessica Lautz said.
“First-time home buyers are really struggling to get in, while those who have housing equity are building credit.”
Price cuts return as sellers adjust to slower market
With days on market rising, price reductions have become more common.
Yun cited MLS data showing average price cuts ranging from 4.9% for homes listed up to 14 days, to 13.8% for those on the market over 120 days.
“It requires some price reduction in order to move the home,” Yun said.
He characterized these as short-term imbalances, expecting a return to moderate price growth nationally.
Despite concerns about rising foreclosures, Yun emphasized that “the housing market’s fundamentals remain solid,” with mortgage delinquencies at historic lows and homeowners sitting on substantial equity.
Job gains are projected to hit 1.3 million in 2026, while unemployment is expected to hold steady at 4.4%.
While 2025 may be another year of stagnation, NAR’s forecast suggests that the conditions for a meaningful housing market recovery are falling into place for 2026, though the benefits may be unevenly distributed.
Lenders, brokers, and real estate professionals should prepare for a more active market, but also for continued challenges among first-time and lower-income buyers.
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