Housing Market Predictions: What to Expect in 2026

Will Mortgage Rates Decline in 2026?

As of late October 2025, the national average rate for a 30-year fixed mortgage was 6.17%, according to Freddie Mac. That's down from a peak of 7.79% in October 2023 but still well above pre-2022 levels.

As 2026 approaches, most experts expect mortgage rates to stay elevated and relatively steady. Inflation has started to creep up again, and economists expect the Trump administration's tariff policy to push it higher. The inflation rate is a primary driver of the 10-year Treasury yield—the benchmark most mortgage rates follow—so persistent inflation could keep borrowing costs from falling much next year.

At the same time, other recent economic developments, including a weakening job market and geopolitical tensions, may make it less likely that mortgage rates will skyrocket again. Barring any significant developments that shock the system, homebuyers and homeowners looking to refinance may need to wait a bit longer for meaningful relief.

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Will Home Prices Decline in 2026?

Experts generally expect home prices to continue to increase in 2026. However, predictions for just how much those prices will climb range from 1.3% to 4%, depending on who you ask. Of the sources we found, only the Mortgage Bankers Association anticipates that home prices will dip slightly next year.

For context, home prices rose by 1.3% year over year as of August 2025, according to data from Cotality.

Will Inventory Increase in 2026?

With persistently high mortgage rates and home prices, inventory still hasn't returned to pre-pandemic levels, according to the Federal Reserve Bank of St. Louis—though it is on an upward trajectory.

Real estate experts anticipate housing inventory will continue to grow modestly in 2026, with growth predictions ranging from 5% to 10%.

However, new construction isn't expected to help much. According to Fannie Mae, housing starts are expected to be down 2.8% in 2025. Additionally, the Mortgage Bankers Association forecasts that housing starts will be down by 2.1%.

Will 2026 Continue to Be a Seller's Market?

It's unlikely that 2026 will shift to a buyer's market, but the balance between buyers and sellers could start to even out.

That means sellers will retain some leverage, but not as much as they've had in recent years. Because home price growth is likely to stay modest, buyers may gain a bit more negotiating power, especially in markets where listings sit longer.

While affordability will remain a challenge, slower price increases could make 2026 a slightly more balanced year for both sides of the market.

Will the Housing Market Crash in 2026?

A housing market crash in 2026 is highly unlikely. The fundamental conditions that typically trigger a collapse, such as oversupply, excessive speculation or widespread risky lending, aren't present today.

In fact, lending standards are tighter than they were in the mid-2000s, and most homeowners have strong equity positions and low mortgage rates, giving them little incentive to sell at a loss.

Even if affordability challenges keep demand relatively slow, the ongoing supply shortage and solid credit quality should prevent prices from dropping sharply. Rather than a dramatic crash, the market is more likely to see gradual adjustments—slower price growth, modest increases in inventory and region-specific fluctuations—rather than a nationwide decline.

Should I Buy a House in 2026?

The decision to buy a home is a personal one, regardless of the state of the market. It's important to carefully consider the factors mentioned above, as well as your financial situation, to determine whether you can afford to buy a home.

If current interest rates are putting home prices out of your reach—the median sales price as of the second quarter of 2025 was $410,800, according to the Federal Reserve Bank of St. Louis—it may be best to wait until interest rates come down more.

But if you find your dream home and you can afford it in the current market conditions, it can make sense to take a higher interest rate now and potentially refinance at a lower rate later on.

If you do decide to move forward with a home purchase, late fall and winter tend to be the best months to buy. Fewer buyers compete during this period, which can lead to lower prices and more negotiating power.

Learn more: Should I Buy a House When Rates Are High or Wait?

Consult With a Professional Who Knows Your Local Market

Predictions for the 2026 housing market are just that, and while economists and analysts tend to focus more on nationwide trends, local real estate agents and other professionals have a finger on the pulse of current trends in your area.

If you're thinking about moving in the coming year, don't hesitate to reach out to experts where you live or plan to move. They can help you get a better idea of what to expect and how to maximize your savings on a new home.

Now is also a good time to start preparing your credit history for a home purchase. Review your credit report and FICO^® Score^Θ for free to evaluate your credit health and, if necessary, take steps to improve your credit before you start the mortgage process.