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After a couple of years where the housing market felt stuck in neutral, 2026 may be the year things shift back into gear.
The most important factor most buyers are looking at is lower mortgage rates.
After peaking near 7 percent early this year, rates have started to ease a bit and the latest forecasts show that trend could continue throughout 2026.
But it most likely won’t be a straight line down – it will be a slow and bumpy process. Expect modest improvement in mortgage rates over the next year but be ready for some volatility as new economic data is released. Still, the overall trend will be a slight decline.
Most mortgage experts say we could hit the low 6s, or maybe even the high 5s. The National Association of Realtors (NAR) expects the average 30-year fixed mortgage rate to decline modestly to around 6.1% in 2026 (from about 6.4% in 2025) as rate-cuts and inflation easing gradually take hold.
If you compare where rates are now to when they were at 7 percent earlier this year, you’re already saving hundreds on your future mortgage payment. That’s enough to make a real difference in affordability for some buyers.
Meanwhile, home prices are still expected to rise, but not by a lot. With rates down from their peak earlier this year, more buyers will re-enter the market. And that increased demand will keep some upward pressure on prices nationally – and prevent prices from tumbling down.
For instance, a panel surveyed by Fannie Mae estimated national home-price growth of roughly 2.8% in 2026, down significantly from the 5 %-plus levels seen in 2024.
Meanwhile, many would-be sellers remain “locked in” to low-rate mortgages, reducing turnover and therefore limiting supply. This lock-in effect is often cited as a drag on market fluidity.
So even though it does seem like there are lots of price declines in the market, it is extremely unlikely that a big crash is on the horizon. Thanks to how much prices rose over the last five years, markets seeing declines right now are still up compared with home prices just a few years ago.
And the sustainable, moderate pace of price hikes will make the market more stable and predictable, which is a welcome environment for buyers who are trying to plan their budgets.
NAR projects existing-home sales to rise by 11% in 2026, following a roughly 6% increase in 2025. They also anticipate new-home sales to grow, though at a lower rate than existing- home sales, thanks to easing rates and rising buyer confidence.
In short: 2026 is likely a year of normalization — not a crash, not a boom, but an easing of extreme conditions that may draw more buyers and sellers back into the housing market.
