It has been hard to predict the housing market in recent years. From the fastest ever tightening of interest rates in 2022, which brought the pandemic boom market to a screeching halt, all the way through tariff panic that appeared to derail the 2025 spring buying season, experts have had a difficult time anticipating shifts in housing.
As at least some forecasters call for a rebound in 2026, Realtor.com® and its Chief Economist, Danielle Hale, are offering a more conservative assessment while calling the 2026 market a “turning point” as housing slowly moves back into balance.
“Once you kind of hit that low level, you sort of found the floor, and you figured out how to operate at this level,” she tells RISMedia. “I’m sure everyone in the industry is excited for sales to come roaring back. We think it’s going to be more of a gradual wave.”
Calling for a modest 1.7% increase in sales and mortgage rates remaining roughly flat at around 6.3%, Hale tells RISMedia that real estate professionals should keep preparing for a more “balanced” market, not necessarily expect a “snapback” to previous norms.
That 1.7% increase in sales still leaves the country 23% below pre-pandemic norms for transactions, which would mean another year of belt-tightening for many who make a living in real estate. Realtor.com predicted that existing sales would come in at 4.07 million in 2025, and they are currently on track for 4.1 million.
At the same time, Hale warns that a lack of data and general unpredictability in the macro picture makes it harder to model or forecast.
“I think in an environment of uncertainty, it’s important to understand what you don’t know and appreciate that you might have to adjust your expectations as the information comes in,” she says.
But on the positive, Realtor.com’s model expects some long-term moves toward a healthier market—speicifcally, monthly mortgage payments on average shrinking below 30% of income, a key threshold for affordability.
“This is going to be the first decline that we’ve had since 2020,” Hale says. “Affordability is still pretty lacking in the housing market. So this is really just marking the turning point, and not so much saying that we’ve arrived in a new affordable environment…buyers are finally getting a little bit of an advantage when we’re looking at the actual cost of their monthly mortgage.”
That could mean that hesitant or middle-income buyers who in 2025 remained on the sidelines during macro turmoil may start to feel more confident and move forward with home purchases. Hale warns that this is not likely to manifest as a sudden surge, though, and that affordability issues will continue to stymie much of the market.
Realtor.com is predicting a 2.2% increase in home prices, not enough to outpace inflation but making homeownership achievable for more consumers as wages are also expected to grow.
Lingering challenges
Right at the top of the forecast, Realtor.com notes that the “macro outlook” remains “foggy.” Hale says the government shutdown and a lack of data really do make it harder for economists to do their jobs.
“Right now we’re even experiencing uncertainty in the present, and even of the recent past, because a lot of the data that we would typically rely on we did not have,” she notes.
That being said, Hale says that specific housing metrics—for instance, average mortgage rates—still point to a relatively slow unwinding of tighter conditions.
At this point, just over half of mortgage borrowers have a rate under 4%. Realtor.com expects that to shrink modestly to 45% of borrowers by the end of 2026, but that homeowners hanging on to a low rate will continue “distorting decisions” in 2026.
A more dramatic loosening of this so-called “lock-in effect” is more likely in the next two or three years, Hale says, as people who bought with ultra-low rates in 2020-21 build up enough equity to justify moving up, or encounter the kind of regular life decisions that precipitate a move.
“So we’re going to start to see that in 2026, but as more and more time goes by, that’s going to be another source of unlock for the housing market,” she says.
At the same time, though, the median expected tenure for buyers to occupy a home now sits at 15 years, up from historical norms of around seven years. That would seem to indicate that many homeowners are not interested (or capable) of the kind of move-up transaction common before the pandemic.
For agents and brokers looking to best prepare in the short term, Hale says that balance is the big theme, even as real estate professionals should still continue to anticipate better days further on up the road.
“It (2026) is absolutely going to be more buyer friendly than it has been in a very long time,” Hale claims. “But that doesn’t necessarily mean that sellers are in a bad position or that buyers can go into the market and expect to get everything that they’re expecting. So I think navigating those expectations and setting them appropriately is going to be really important for agents in the year ahead.”
