2026 Housing Market Outlook: A Shift Toward Balance as Prices Ease and Mortgage Rates Decline

Entering the housing market remains difficult. Home prices are hovering near historic highs and mortgage rates are still sitting comfortably above 6%, creating affordability pressure for buyers. However, conditions may begin shifting in 2026. A recent Realtor.com report projects that home values could decline in 22 of the 100 largest U.S. metropolitan areas next year, while borrowing costs are expected to edge downward. According to Jake Krimmel, senior economist at Realtor.com, the market may transition toward greater equilibrium in 2026. Rather than favoring sellers — as seen during the pandemic surge — or buyers, the environment could resemble the most balanced landscape since COVID disrupted housing trends. In practical terms, neither side would dominate negotiations. Mortgage rates are forecast to average approximately 6.3% in 2026, down slightly from the projected 6.6% average in 2025. While not dramatically lower, even modest relief in financing costs combined with anticipated wage growth could motivate more prospective buyers to reenter the market. Krimmel expects the housing sector to stabilize next year, signaling a gradual return to more typical market behavior. This stabilization is projected to support a modest uptick in existing-home transactions. Realtor.com estimates 4.13 million existing-home sales in 2026 — a gain of under 2% from the 4.07 million projected for 2025. Although the increase appears minor, it marks a shift from the relatively stagnant activity observed throughout 2025. Zillow offers a similar outlook. The company anticipates improving conditions for buyers as available listings increase and mortgage rates soften. Its forecast places 2026 existing-home sales at nearly 4.3 million units, representing a 4.3% rise from 2025 projections. Zillow expects mortgage rates to remain slightly above 6% — elevated compared to recent pandemic-era lows but still moderate relative to long-term historical averages.

Regional Price Adjustments

The anticipated price corrections are concentrated primarily in Southeastern and Western markets. Florida stands out in particular. Realtor.com projects that seven of Florida’s eight largest metropolitan areas will experience price declines in 2026, with Miami being the only exception. Cape Coral and Fort Lauderdale are expected to record the steepest decreases nationwide, with projected price drops of approximately 10.2%. The North Port–Sarasota–Bradenton region follows closely, with an anticipated decline of 8.9%. Many of the metros forecast to see price reductions share common characteristics: expanding inventory levels and cooling buyer demand. During the pandemic, these markets experienced intense purchasing activity driven by ultra-low interest rates and remote-work flexibility. As those conditions normalize, demand is also easing, contributing to downward pricing pressure. While 22 large cities are expected to post price declines, the remaining 78 major markets are forecast to see price increases. However, gains are expected to be modest, with a median projected increase of around 4%.

Methodology

Realtor.com’s projections are based on a comprehensive review of market fundamentals across 100 metropolitan areas. The analysis incorporated factors such as available housing supply, new construction trends, recent price momentum, wage and employment growth, and unemployment levels.