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2026 Housing Market: Brace for Flat Prices & Rate Drops?
14 Dec
Summary
- Home prices are expected to remain flat through January 2026, with slow growth thereafter.
- Mortgage rates may fall to 6.4% by year-end 2025 and 5.9% by end of 2026.
- Home sales are predicted to increase in 2026, potentially by 8.9% year-over-year.
The real estate market in late 2025 presents a complex picture for both buyers and sellers. National average home prices have remained essentially flat, a contrast to the seller-friendly conditions of previous years. This stagnation, coupled with uncertainty surrounding mortgage rates, creates a challenging environment. However, expert forecasts suggest potential changes heading into 2026, indicating that market dynamics are cyclical.
Projections for home prices in 2026 vary, with some predicting continued flatness into January followed by slow growth. Others anticipate several quarters of declining prices before a national increase potentially occurs in 2028. Mortgage rates are expected by some to decrease by the end of 2025 and continue falling through 2026, although alternative forecasts suggest a later and more modest rate reduction.
Despite current sales sluggishness, the outlook for 2026 home sales is more optimistic. Increased inventory is anticipated, offering buyers more options. Several forecasts predict year-over-year increases in home sales throughout 2026, potentially boosted by lower mortgage rates making millions more households affordable. Even with persistent interest rates, sales volume is expected to rise.
