Housing forecasts for 2026

As the year winds to a close, we’re looking ahead to what might be in store for 2026. Marketplace’s Amy Scott has been looking at forecasts for the housing market and spoke with “Marketplace Morning Report” host Nova Safo. The following is an edited transcript of their conversation.

Nova Safo: So, let's begin by describing where the housing market is right now. How would you describe it as we close out the year?

Amy Scott: Yeah, well, it's overall been pretty sluggish. Of course, there are big regional differences, but sales have been pretty flat, and that's just because affordability remains such an issue for people trying to get into the market. So, mortgage rates have come down. You know, they were closer to 7% when this year started. Now they're in kind of the low 6% range for a 30-year fixed-rate mortgage, but that hasn't been enough to offset the really high prices that are keeping a lot of would-be buyers on the sidelines. And then home sellers — many of whom have these ultra-low interest rates from the pandemic — have just had a hard time parting with those rates and moving. So, we've seen a lot of houses taken off the market or deals that fell through. And as folks have been telling me, overall, no one walked away happy from this housing market.

Safo: Oh boy, that's a tough market. And what's the outlook for 2026?

Scott: Well, most economists I've been talking to, and realtors, are expecting some improvement: a modest pickup in sales. I've seen ranges from 1% to 3% increase in sales, though the National Association of Realtors is sort of the outlier, predicting a 14% increase. But generally, economists expect mortgage rates to stay in the low-to-mid 6% range, which will mean prices don't rise as fast as they have been. Many are actually expecting prices to rise more slowly than incomes, which would be the first time that happened for a prolonged period in many years. Redfin is predicting what they're calling a years-long “great housing reset” that will begin in 2026 with gradually improving affordability and something more like a normal market, which we haven't seen in a long time.

Safo: Well, that certainly would be a light at the end of the tunnel. But, you know, we always have to take any forecast with a big dose of salt, right? What are some caveats that we should be thinking about?

Scott: Yeah, I mean, there's a lot of uncertainty about the job market. If it's going to get a lot weaker, that would certainly hurt home sales. What happens with inflation and tariffs is very much a question mark, Fed leadership. As one economist told me, “No one's ever right about economic forecasts, and if they say they were right, they're lying.” So, this is the best guess that folks I've talked to can make right now.