2026 Housing Market Outlook: A New Era of Opportunity for Buyers and Sellers

A New Chapter for the U.S. Housing Market

As we head into 2026, we’re not just turning the page on another year — we’re entering a new era for the U.S. housing market.

According to the Compass Intelligence 2026 Housing Market Outlook, authored by Compass Chief Economist Mike Simonsen, the market is finally beginning to rebalance after years of disruption driven by the pandemic, rapid interest rate changes, and frozen homeowner mobility.

The takeaway?
Home sales are poised to pick up, affordability is slowly improving, and opportunities are emerging — though they will look very different depending on where you live and how you plan to buy or sell.

Key Theme #1: Improving Affordability Without a Market Crash

Housing affordability reached its worst level in nearly 40 years in late 2022. While many buyers have been waiting for a dramatic price correction, Compass economists project a different — and healthier — path forward.

Rather than a sharp decline in home values, affordability is expected to improve through:

• Flat home prices nationally (forecasted at +0.5% in 2026)

• Rising household incomes (approximately 4% annually)

• Gradually stabilizing mortgage rates

This combination allows buyers to regain purchasing power over time while protecting homeowners from the kind of instability seen during the 2008 financial crisis.

What this means:
Buyers may find more breathing room, while sellers will need to price strategically from the start. The days of “name-your-price” listings are behind us — but so are fears of a widespread housing collapse.

Key Theme #2: The End of ‘The Great Stay’ and a Slow Return of Mobility

One of the most defining forces of the post-pandemic housing market has been what Compass calls “The Great Stay.” Millions of homeowners delayed moves due to ultra-low mortgage rates and job uncertainty, keeping inventory historically tight.

That dynamic is now beginning to unwind.

By the end of 2025:

• Nearly 20% of homeowners hold mortgages above 6%

• The mortgage rate “lock-in effect” is fading

• Pent-up demand from both buyers and sellers is building

This shift is expected to lead to modestly higher transaction volume in 2026, not from forced selling, but from households finally acting on long-delayed life moves.

What this means:
Expect more listings to come to market — but not a flood. Increased mobility supports healthier market activity without overwhelming supply.

Key Theme #3: A Housing Market Divided by Geography and Prosperity

One of the most important insights from the 2026 outlook is that national averages will hide dramatically different local realities.

The U.S. economy — and housing market — is increasingly K-shaped:

• Luxury and high-net-worth buyers continue to outperform, often paying cash and benefiting from equity markets

• Entry-level and first-time buyers remain more sensitive to affordability and employment trends

• Sun Belt markets face higher inventory and price pressure

• Northeast and Midwest markets remain supply-constrained with stronger price support

This divergence makes local expertise more important than ever.

What this means:
Whether it’s a buyer’s market or seller’s market depends entirely on where you are, what you’re buying or selling, and how you approach pricing and timing.

Mortgage Rates, Inventory & Home Prices: What to Expect in 2026

Here’s what Compass forecasts nationally for 2026:

• Mortgage Rates:
  Expected to range between 5.9%–6.9%, averaging around 6.4%, with small changes having outsized impact on buyer activity

• Inventory:
  Projected to grow approximately 10%, helping unlock transactions while keeping price growth in check

• Home Prices:
  Forecasted to remain largely flat, with modest declines or gains depending on the region

• Home Sales:
  Expected to rise 5% nationally, with upside potential if rates dip into the low-6% range 

What This New Era Means for Buyers and Sellers

For Buyers

• More choices and negotiating power in many markets

• Opportunities emerging where inventory has normalized

• Timing matters — small rate drops can quickly increase competition

For Sellers

• Pricing correctly from day one is essential

• Well-prepared homes will continue to stand out

• Serious buyers are still active — especially in the luxury segment

Why Local Strategy Matters More Than Ever

2026 will reward informed, data-driven decisions. The market is no longer defined by frenzy or fear, but by strategy, preparation, and local insight.

Understanding how national trends intersect with your specific neighborhood, price point, and goals is where true opportunity lies.

Let’s Talk About What This Means for You

Whether you’re considering buying, selling, or simply planning ahead, having a clear, localized strategy matters more than timing the market.

📍 If you’d like a personalized look at how the 2026 housing outlook applies to your neighborhood, reach out anytime — I’m happy to help you navigate what’s next with confidence.