2026 Housing Market Forecast: A Shift Towards Buyer-Friendly Conditions
The housing market is currently challenging for buyers due to high home prices and mortgage rates above 6%. However, there is hope for a shift in 2026, with property prices predicted to decrease in 22 of the largest 100 U.S. cities and mortgage rates expected to slightly ease, according to a recent analysis by Realtor.com. The market is anticipated to become more "buyer-friendly" next year, leading to a more balanced housing market since the pandemic, where neither sellers nor buyers are expected to have the upper hand in negotiations, as stated by Jake Krimmel, a senior economist at Realtor.com.
Mortgage rates are forecasted to drop to an average of 6.3% in 2026, a slight decrease from the 6.6% average rate in 2025. Lower borrowing costs and strong wage growth are expected to encourage more buyers to enter the market next year, according to Krimmel. The upcoming year is projected to bring stability to the market and show signs of returning to a more normal state, which will likely boost existing-home sales. Realtor.com's report estimates a modest increase of less than 2% in home sales to 4.13 million properties in 2026, compared to this year's projected 4.07 million home sales.
The cities where home prices are expected to decline in 2026 are mainly located in the Southeast and the West regions of the U.S. For example, seven out of the eight largest cities in Florida are predicted to experience decreases in home prices next year, with Miami being the only exception, according to the report. The Cape Coral-Fort Lauderdale metropolitan area is anticipated to have the largest price decline nationwide, with homes expected to drop by 10.2%, followed by the North Port-Sarasota-Bradenton, Florida region with an 8.9% decline. These cities with projected price drops have seen an increase in inventory, providing more options for buyers and potentially lower demand compared to the peak of the COVID-era real estate boom.
In contrast, prices are projected to rise in the other 78 largest U.S. cities, but the increases are likely to be modest, with a median price gain of 4% across those areas. The overall outlook for the housing market in 2026 suggests a more balanced and stable environment, with opportunities for both buyers and sellers to navigate the market with less volatility and more predictability.