The real estate industry is viewing 2026 with hearts full of hope. After a challenging few years since the pandemic, the housing market is due for a rebirth.
Economists’ predictions across the board have shown a better future on the horizon, and Bright MLS Chief Economist Lisa Sturtevant is one of them.
In her opinion, 2026 will be the “transition year” that brings the market closer to the long-awaited normalization it needs.
At RISMedia’s recent Real Estate’s Rocking in the New Year virtual event, Sturtevant broke down some of the things we must be paying close attention to as we head into this year’s housing market during her “Economic Outlook: Key Trends Shaping the Year Ahead” panel.
Sturtevant opened the panel noting that 2026 should see “the market head back towards a more normal condition,” with sales a little lower than expected in a normal year and price growth slowing.
That said, she also pointed to the fact that “there’s going to be a lot of uncertainty.”
First things first, mortgage rates.
Sturtevant said that forecasts have generally been predicting a decrease in rates in 2026—including Bright’s own forecast—remaining above 6% but at the lower end of the spectrum.
This decrease will improve affordability for some homebuyers, with Sturtevant saying it could bring a mortgage payment down by $300, but for some, it won’t be enough of an improvement.
Sturtevant clarified that for affordability to truly improve, “what we really need is for incomes to continue to rise” and for “price growth to slow along with lower rates.”
She added that there have been signs that rates could decrease further than predicted, as “we’ve seen economic growth slowing, we’ve seen labor market conditions weaken” and “both of those things tend to lead to lower mortgage rates.”
In January alone, rates hit their lowest level in over three years, dropping to 6.06% and only increasing slightly to 6.09% the very next week. The decrease was widely attributed to President Trump’s instruction to Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities.
Sturtevant said that even with these improvements, rates probably won’t fall below 6%.
Eyes remain on the Federal Reserve’s Open Market Committee and its decisions in upcoming meetings, as Sturtevant noted that a cut in interest rates “leads to lower borrowing costs.”
On the other end of the spectrum, Sturtevant indicated that if inflation takes a turn upward, rates could follow.
“If we see labor market or consumer spending higher than we expected, that would also lead to mortgage rates remaining stuck where they are,” said Sturtevant, who pointed to the “economic uncertainty people are feeling” as one of the other big things to watch this year.
While consumer sentiment has remained lower than pre-pandemic levels, and January’s Consumer Confidence report saw confidence fall to the lowest point in over a decade, Sturtevant went on to explain that “people are feeling anxious, people are feeling nervous about their own economic situations.”
“Exactly how anxious are they, and what impact might that have on the housing market?” questioned Sturtevant, who pointed to Bright MLS’ own consumer survey back in December, which showed high levels of economic uncertainty.
“Seventy-seven percent of people said that they’re somewhat worried that they’ll have to cut back on essential spending in 2026,” said Sturtevant, “while 80% said that they’re worried they’ll have to cut back on discretionary spending.”
She also noted that many consumers were concerned about job security and taking on more debt, levels of economic anxiety from consumers that will likely create “headwinds in the housing market.”
But, according to Sturtevant, 2026 is set up like a “turf war,” with “economic uncertainty and anxiety on one side and lower mortgage rates and improved affordability on the other side” and an “open question about which one is going to win out.”
Ultimately, and what one could argue is most important, is what is driving people to sell homes—what Sturtevant called “the fundamentals.”
According to Bright’s monthly survey of agents, while family reasons (marriage, divorce, having children, etc.) are often most common among those looking to buy and sell, Sturtevant said that the latest research has shown that people are hitting milestones later in life, which has been “a factor in delaying homeownership,” coupled with affordability and inventory.
So, what are the overall expectations for this year?
Selling-wise, Sturtevant believes there will be more sellers in 2026, but they’ll have to “reset their price expectations.”
“Some markets will be moving toward buyer’s markets, while in other markets there will be more inventory,” she explained. “Either way, sellers are going to have to prepare for more flexibility in negotiation with buyers.”
Buyers have also been leaning away from fixer-uppers, so “getting that home in move-in ready condition is going to be really important for a fast sale in 2026,” she said.
Most of all, sellers will need to understand their local market conditions, as “all markets are going to be different from the buy side.”
For buyers, they should expect more inventory, and more leverage on price and negotiations. While affordability constraints remain, Sturtevant said it’s better to get your “financial ducks in a row and be ready to make an offer when it’s the right time for you.”
For the agents navigating buyers and sellers through the real estate journey, Sturtevant noted that “your job, more than ever, is to be that trusted advisor to provide guidance, to help mitigate risk, to help mitigate uncertainty.”
She continued by saying that agents will have to be “patient because buyers and sellers are going to be having to think through their options and think about the things that are of concern to them, but also be proactive to help provide the information that they need to make a good decision.
“Being the local expert on the local market will help you be the trusted advisor that buyers and sellers are looking for in this transitioning housing market,” concluded Sturtevant.
