What Does 2026 Have in Store for the Housing Market?

The housing market in 2025 was a mixed bag. While affordability challenges continued to burden both buyers and home builders, the latter half of the year saw slight declines in both home prices and mortgage rates. Looking at the year ahead, financial services firm First American’s 2026 Forecast predicts affordability issues will persist into the new year, but homebuying activity overall should improve.

Buyers are expected to make a comeback

Homebuying will likely pick up in 2026 as housing market dynamics improve. Mortgage rates are expected to remain in the low 6% range, and home prices are expected to grow but at a more moderate pace. 

Additionally, pent-up demand from this year is expected to fuel more home sales in 2026. Currently, there are nearly 52 million Americans in their 30s who rent their homes, and many of them are expected to enter into the for-sale housing market in the near future.

Regional variations that defined the housing market in 2025 will persist in 2026

In 2025, many seller’s markets were located in supply-constrained areas of the Northeast and Midwest, and that trend is expected to continue into the new year. Meanwhile, much of the buyer activity in 2026 is expected to be in Southern and Soutwestern metros, such as Austin, Texas, and Tampa, Fla.

Builders could have an edge over the existing-home market in 2026

Throughout 2025, single-family builders had difficulty competing with the resale market. Toward the end of the year, however, buyer demand slowed, prompting many sellers in the resale market to pull their listings. Builders, meanwhile, offered incentives and lowered prices in an attempt to move their growing inventory. With much of that inventory still on the market, builders are expected to set the pace in 2026 as buyers return.