It’s the time of year when our reporters’ inboxes fill up with economic forecasts for the coming year, which we take with a healthy dose of skepticism. The late economist Ezra Solomon is credited with saying, “the only function of economic forecasting is to make astrology look respectable.” Still, it can be instructive to know what smart people with skin in the game are thinking about, going into a new year. With that in mind, let’s look at some forecasts for the housing market. 

Before we get to 2026, though, here’s how our informal panel of experts summed up the year in housing we’re leaving behind. Between the high cost of borrowing, stubbornly high prices, and all the economic uncertainty this year, they said, sales of both existing and new homes were pretty lackluster.

“I would say 2025 was a year of many headwinds, and as a result, a year of frustration, I think, for both buyers and sellers,” said Jake Krimmel, senior economist at Realtor.com. “Overall, a year where nobody really walked away very happy.”

Daryl Fairweather, chief economist at Redfin, agreed. “Buyers were up against high mortgage rates, high prices, and sellers were feeling like they weren't getting the offers that they deserved in order to give up the record low mortgage rates they got during the pandemic,” she said.

Rick Palacios Jr., director of research at John Burns Research and Consulting, summed up the 2025 market with one word: “underwhelming.”

Most analysts expect sales of existing homes to pick up in 2026.

Fairweather is predicting a yearslong “housing reset” will begin next year, with gradually improving affordability. 

“Mortgage rates have already come down, and we think they're going to stay at these lower levels of around 6.3% for a 30-year, fixed-rate mortgage, which means that it's going to be more affordable to buy a home next year,” she said.

That should lead to a modest 3% increase in sales, she said. Meanwhile, Redfin predicts incomes will rise faster than home prices for the first prolonged period since the Great Recession.

“We're only forecasting a 1% increase in prices, and that's slower than what the wage increases should be across the country,” Fairweather said. 

Krimmel is also looking for modest improvement in affordability, with household incomes rising 4% and home prices, nationally, just 2.2%.

“It's not earth shattering, but it is a trend that's moving in the right direction for the market,” he said.

And after a yearslong sellers’ market that finally shifted toward buyers this year, Krimmel said he’s expecting the most balanced market in about a decade.

“That means that neither buyers nor sellers are going to have an upper hand in negotiations as a whole,” he said. 

On the new home side, Palacios is a little gloomier.

“We expect a pretty glacial housing market next year,” he said, predicting single-family construction will fall about 3% as homebuilders have trouble unloading what they’ve already built.

“Going into 2026, the homebuilders that we survey tell us that they have the highest unsold, finished inventory that they've had since January 2010,” Palacios said. 

It all goes back to affordability. 

“The consumer is telling us, ‘yeah, we'd like to buy, but at these prices, at these interest rates, it doesn't make sense, and maybe we’re a little skittish too because of what’s going on in the economy,’” he said. 

Buyers may see some deals in the year ahead. For renters, the outlook is mixed, with forecasts ranging from a slight decline in rents, to modest growth. And with any forecast, there are some big caveats. Regional differences, for one. Plus the job market, tariffs and inflation, and an upcoming leadership change at the Federal Reserve are all unknowns that could throw off these predictions.

“No one is ever right, and if they say they were right, they’re lying,” Palacios said. “But if we’re less wrong, that’s good, than our competitors.”