Economists see a long, uneven recovery ahead as rates ease and wages outpace prices
Redfin’s latest outlook casts 2026 as the start of a “Great Housing Reset,” in which affordability will improve gradually rather than through a sharp correction or recession.
The brokerage projects that incomes will rise faster than home prices for the first sustained period since the aftermath of the financial crisis, offering modest relief to stretched borrowers.
Under the forecast, the 30‑year fixed mortgage rate is expected to average about 6.3% in 2026, down from roughly 6.6% in 2025 but still high by pre‑pandemic standards.
Affordability and volume outlook diverges
Redfin expects the median US home-sale price to rise just 1% year over year in 2026 as “still-high mortgage rates and prices, along with a weaker economy” kept demand in check.
At the same time, the firm projects existing-home sales would end 2026 up 3% from 2025, at an annualized 4.2 million.
Meanwhile, the National Association of Realtors (NAR), previously forecasted a 14% jump in 2026 home sales and a roughly 4% gain in prices, driven by easing rates and continued job growth.
“It’s not going to be a big decline, but it will be a modest decline that will improve affordability,” NAR chief economist Lawrence Yun said of mortgage rates, which he expected to average about 6% in 2026.
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.https://t.co/vKZugrGwE4
— Mortgage Professional America Magazine (@MPAMagazineUS) November 17, 2025
Mortgage refinancing and equity release
Redfin projects US mortgage refinance volume to rise more than 30% in 2026, reaching about $670 billion as roughly one in five borrowers with rates above 6% looked to reset their loans.
The company also highlights how “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, supporting demand for HELOCs and cash‑out refinances to fund renovations rather than moves.
That refinancing narrative broadly aligned with the Mortgage Bankers Association, which expected total single‑family originations to climb to $2.2 trillion in 2026, including a projected 9.2% increase in refinance volume to $737 billion.
Policy, demographics and climate pressures
Even as affordability improves on paper, younger households will still be forced into trade‑offs.
Redfin warns that Gen Z and millennial homeownership rates has flatlined and that more adults will live with parents or roommates, while high housing costs contribute to smaller families.
The firm also anticipates that “politicians on both sides of the aisle” would respond to voter anger over housing costs with measures ranging from YIMBY legislation to zoning changes for ADUs and manufactured housing.
One more speculative element of the forecast – that President Trump “may declare a national housing emergency” – remains a political possibility rather than an economic baseline.
Beyond policy, Redfin points to climate and AI as emerging forces reshaping demand. It expects more “hyperlocal” climate migration within metros, as households trade high‑risk neighborhoods for relatively safer ones, and predicts that generative AI would increasingly act as a real‑estate “matchmaker,” guiding buyers toward homes that met budget, location and lifestyle constraints.
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