2026 Real Estate Outlook: A Market in Transition

The real estate market in January 2026 is anticipated to be a period of recalibration and rebound, characterized by stabilizing interest rates and a re-alignment of fundamentals. While not a return to speculative highs, it is expected to be a more balanced market with opportunities for prepared buyers and sellers. Mortgage rates are predicted to stabilize between 6.0% and 6.4%, with some experts forecasting an average of 6.15%. Home sales are projected to increase, and home price growth is expected to be moderate, around 2% to 3% nationally. Regional variations will be significant, with the Midwest and Northeast potentially seeing higher price growth due to persistent inventory scarcity. Affordability challenges remain, but a slight easing is expected as incomes rise faster than home prices. The market is shifting from a seller's market towards a more balanced one. Sellers may need to adjust expectations and be prepared for price cuts, especially for lower-cost homes. There is some improvement in new-home construction, with a projected 1% gain in single-family home building and new-home sales for 2026. However, a structural housing deficit persists, meaning the housing stock is not large enough for the population. This remains a major constraint on affordability, and building more homes is seen as the solution. Zoning and land-use policies are a significant limitation on the supply side, often restricting the density needed for affordable housing options. Overall, the real estate market in 2026 is expected to be a 'comeback cycle' and a turning point, moving towards a more balanced state after a period of adjustment. This comeback is not driven by speculation or hype, but by a recalibration of market fundamentals, including stabilizing interest rates and returning certainty.