Steady Job Growth and Lower Rates Could Drive a Housing Surge in 2026
Real estate professionals may finally see the long-awaited rebound in 2026, with home sales potentially jumping double digits. Lawrence Yun, chief economist at the National Association of REALTORS® (NAR), forecasts a 14% increase in nationwide home sales next year, following 2025’s flat performance. New-home sales are also expected to rise about 5%.
“Next year is really the year that we will see a measurable increase in sales,” Yun said at NAR NXT, the Residential Economic Issues & Trends Forum. Despite rising sales, home prices are expected to remain stable, with a projected 4% increase nationally, supported by steady job growth and ongoing supply shortages.
Early Momentum
The market may already be building momentum. Mortgage applications are trending higher, job gains remain steady, and homebuilders continue to add supply. Recent disruptions, like the 43-day government shutdown, are now behind us. Mortgage applications for home purchases have surged 31% higher compared to a year ago, according to the Mortgage Bankers Association.
Mortgage Rates: Slight Improvement Ahead
Mortgage rates, still a key factor for affordability, have drifted down from around 7% at the start of the year to 6.24% on average recently, per Freddie Mac. Yun predicts rates will average around 6% in 2026, providing modest relief for buyers. While buyers shouldn’t expect a return to ultra-low rates, even small decreases could spark substantial activity.
Uneven Market Recovery
Not all buyers will feel the rebound equally. Higher-priced homes ($750,000–$1 million) are seeing strong activity, while inventory remains tight at lower price points. First-time buyers are struggling to enter the market, dropping to a historic low of 21% of all homebuyers, with a median age of 40. Repeat buyers, especially baby boomers, are dominating, often leveraging home equity or paying cash.
Pricing Trends
As seasonal slowdowns set in, sellers are adjusting expectations. Homes sitting on the market for longer periods are seeing price reductions ranging from 4.9% to 13.8% depending on days listed. Nationally, NAR expects a median 4% home price gain in 2026.
Looking Ahead
Despite concerns about foreclosures, housing fundamentals remain strong: low delinquencies, solid equity, and steady job growth. After a mostly stagnant 2025, the stage appears set for a meaningful housing market recovery in 2026.
Source: National Association of REALTORS®, Residential Economic Issues & Trends Forum, NAR NXT 2025.
