This year is on track to end with a slower than average housing market, but will 2026 kick real estate into high gear? The 2026 housing forecast from Bright MLS projects another “transition year” for housing, with slight pick-ups in market fundamentals but enduring challenges for first-time buyers, as well as strong differences between regional housing markets.
When asked in an interview with RISMedia about what posture real estate agents should take for next year’s market, Bright MLS Chief Economist Lisa Sturtevant said agents should consider clients’ anxiousness and be informed so as to soothe that anxiety with facts.
“(People are) getting a lot of information, oftentimes at a very high level, like a national level. So real estate professionals working with buyers and sellers can make themselves valuable by helping to bring local data, particularly about the housing market, to their buyers and sellers to help dispel myths about what’s going on in the housing market and to help their buyers and sellers feel confident,” says Sturtevant.
What housing market data does Bright’s forecast offer, and how was it compiled into a forward-looking projection?
“While we start with a model that looks at past trends in the relationship between household formation, home sales, inventory, prices and mortgage rates as a starting point, it has been my experience that over the last particularly three or four years, the housing market hasn’t always performed in the way that it has in the past,” says Sturtevant about the forecast’s methodology.
“The biggest example, of course, is just how we had this very unprecedented drop in mortgage rates and people tied up in their homes,” Sturtevant continues. “In a normal market, you might expect more inventory to be coming onto the market, but we’re still seeing relatively slow inventory growth. Part of that is because of this lock-in effect that wouldn’t have shown up if you just ran a model based on past performance.”
Bright MLS projects that mortgage rates, which came in at 6.25% as of Q4 2025, will reach 6.15% within a year, which will help open up the market for first-time buyers. The decline of rates is forecast due to expected interest rate cuts by the Federal Reserve in response to weakening economic conditions. However, the report also notes that should there be a rise in inflation or federal deficits, or an “unexpected international conflict,” that could mean mortgage rates will climb higher instead.
Asked how mortgage rate lock (and the “golden handcuffs” of a lower than 6% mortgage rate) will factor into the 2026 housing market, Sturtevant explains that as financial situations for homeowners change, the weight of the mortgage rate as a decision-making factor does, too: “(While) I do think that while people are still going to want to hold on to their lower mortgage rates, I think there’s going to be more people listing their home for sale, giving up those low mortgage rates as current rates come down and as their family and financial situations change.”
Bright projects existing-home sales will grow by 9% next year, from 4.137 million to 4.510 million. “There is significant pent-up demand in the market, particularly among younger households,” the report stated. “If current homeownership rates for people in their 30s and 40s were the same as they were in 2000, we have an estimated 750,000 more homeowners in the U.S.”
Bright MLS expects that the U.S. median home price, which increased annually by 2.2% as of Q4 2025, will reach $417,600 by the end of next year. (This is a 0.9% annual increase, which Sturtevant characterizes as slower than normal.) Annual inventory growth is projected to have slowed slightly by Q4 2026, from 12.9% (current rate) to 10.9% by Q4 2026.
Price growth is the area where the report points to stark regional variations. Surveying major U.S. metro areas, Bright MLS projected median home prices to 1) Fall in some Southern and Western markets throughout Florida, Texas, the Sun Belt, the Pacific Northwest and the Washington, D.C., metro area; 2) Remain stable in most Southern and lower Midwest markets; and 3) Rise in New England and other Midwest areas, including Chicago.
The report attributes projected price growth in the Northeast and Midwest to factors such as low inventory (still below pre-pandemic level) and limited construction. Conversely, markets projected to see price decreases—such as major Florida metro areas or Western cities—are ones that have seen “surplus” of inventory and thus downward pressure on demand and/or affordability challenges.
In Bright’s previous annual housing market forecast for 2025, Sturtevant described a “tale of two housing markets,” where market conditions were much more favorable to high-end buyers. The 2026 forecast now projects that higher-end buyers will, based on recent trends of pullback in their spending, be less active in the housing market next year than they were in 2026. If higher-end buyers do remain “bullish” on the economy and active in the housing market, that could drive housing prices up further.
A big sector of the current economy is AI, which the Bright forecast weighs for possible impacts. If AI continues to drive economic growth, then regions where AI investment is happening would see housing demand go up—but at the same time, increased AI investment could lead to firms cutting jobs, which would lower demand. There have been concerns that the AI boom is a bubble due to burst, but Sturtevant is doubtful such a bubble, if it exists, is likely to threaten the housing market next year.
“I don’t think we’re going to see an AI bubble impact the housing market,” Sturtevant said. “Just the way in which industries grow and the way that we’re seeing nascent growth in some of those industries and pulling people into the Bay Area in particular doesn’t strike me as a major risk in the 2026 housing market.”
Asked about ongoing challenges of housing affordability and what can address it, Sturtevant says that “we need the cost of getting into a home to grow more slowly. So we need monthly payments to begin to grow more slowly than incomes in order to correct the affordability problem.”
Sturtevant pointed to the slow projected 0.9% price growth as something will ease housing unaffordability, but hardly solve it—“I do think this affordability challenge is going to be with us for some time until that income growth begins to outpace the cost of getting into homes.”
For the full Bright MLS 2026 forecast, click here.
