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Housing Market Stabilizes: Rates, Sales to Improve
4 Dec
Summary
- Mortgage rates are predicted to stay above 6% in 2026.
- Home prices are expected to rise 2.2%, below income growth.
- Home sales projected to increase 1.7% in 2026.
The housing market is poised for a period of stabilization in 2026, with average mortgage rates expected to hold steady above 6%, specifically at 6.3%. This forecast anticipates that the Federal Reserve's anticipated rate cuts will be priced into the market, offering welcome predictability for potential homebuyers after years of volatile rates. Affordability is set to improve as home prices are projected to increase by 2.2%, a figure expected to be below both inflation and income growth.
Home sales are forecast to rise by 1.7% in 2026, reaching approximately 4.1 million units. While still subdued compared to previous years, this represents a modest improvement from the 30-year lows observed in 2024 and 2025. Buyers can also anticipate an increase in housing inventory, with an 8.9% rise projected nationwide, leading to less competition and greater negotiating power.
Regional performance is expected to vary, with the Northeast and Midwest projected to see stronger growth due to constrained inventory, while the South and West will likely experience more moderate price appreciation owing to increased new construction and inventory. Economic uncertainty remains a key factor influencing the market, with consumer confidence playing a crucial role in boosting activity.
