The 2026 housing market marks the start of a new era in real estate—one defined by stabilizing prices, slowly improving affordability, and a long-awaited thaw in American mobility. After years of pandemic-driven volatility, this year is shaping up to be more balanced, more predictable, and, in many markets, more opportunity-rich for both buyers and sellers.
According to the Compass 2026 Housing Market Outlook several major forces will define the next 12 months.
Affordability Is Finally Beginning to Improve
Housing affordability reached a 40-year low in 2022, driven by a perfect storm: rapid price appreciation followed by a dramatic jump in mortgage rates. But the report confirms that affordability is now on a slow but steady path toward improvement.
Here’s why:
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Home prices are expected to stay flat in 2026, with a forecast of +0.5% nationally and a plausible range from –3.6% to +4.6%
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Inventory is up for the third consecutive year, sitting 15% higher than last year.
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Household incomes continue to grow, rising around 4% annually.
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Mortgage rates are expected to average about 6.4%, trading between 5.9% and 6.9% depending on the economy.
Affordability isn’t snapping back overnight, but the combination of flat home prices, rising income, and slightly easing rates creates a slow, measurable return to healthier buying power.
The Great Stay Is Ending: Mobility Begins to Unlock
From 2022–2025, mobility all but froze. Homeowners stayed put, reluctant to trade their ultra-low mortgage rates for costlier loans. Job uncertainty also kept many from relocating. This phenomenon nicknamed “The Great Stay” effectively stalled the housing market.
But 2026 looks different.
The report highlights two major shifts:
1. Mortgage Lock-In Is Fading
For the first time since before the pandemic:
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Nearly 20% of mortgages now carry interest rates above 6%
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The average outstanding mortgage rate is back to 4.4%—the same as 2019.
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Roughly 10 million homeowners are no longer anchored to an ultra-cheap rate.
This creates a growing pool of potential sellers who finally feel free to move.
2. Pent-Up Demand Is Surging
Surveys show that the share of homeowners who want to move within two years has jumped from 10% to 25% since 2022.
Buyers who sat out the last few years are now re-entering the market—and the moment rates dip closer to 6%, that pent-up demand becomes active demand.
A Housing Market Split by Geography & Prosperity
The report makes something very clear: 2026 will not feel the same in every market.
Northeast & Midwest
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Still facing tight inventory
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Homes move quickly
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Buyers must act fast when the right property appears
Sun Belt Markets
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Inventory is abundant
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Prices remain under pressure
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Buyers hold more negotiating power
For example:
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Texas: 50% more homes for sale today than in 2019
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Florida: inventory growth slowed from 50% annually to closer to 10%—still elevated, but stabilizing
The economy itself is split in similar ways. Older, affluent households benefit from stock-market and AI-driven wealth gains, while younger borrowers face tightening budgets, student-loan payments, and higher delinquency rates. That dynamic is why luxury continues to outperform the broader market heading into 2026.
Shadow Inventory vs. Shadow Demand: The Hidden Dynamic to Watch
One of the most important insights in the report:
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Nearly 60% of listings were withdrawn in late 2025, the highest level in years
These withdrawn listings represent shadow inventory- homes likely to come back on the market once conditions improve.
At the same time:
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Mortgage applications ran 15–25% higher YoY in 2025
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But actual home sales increased only 2–4%
This gap represents shadow demand—buyers who started the process but backed out due to affordability or lack of suitable inventory.
A small decrease in mortgage rates could release both forces at once, driving higher sales volume without overwhelming inventory.
Will Prices Fall? Will Sales Rise? Here’s What the Data Actually Says
Home Prices
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Forecast: +0.5% (essentially flat)
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Possibility: small declines in many metros
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Reality: 2026 is the most likely year since 2010 to see a modest national price dip
Home Sales
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Existing sales expected to rise ~5%, from 4.1M to ~4.25M
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In a more optimistic scenario, sales could reach 4.5M (10% growth)
Inventory
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Forecast: ~10% growth in 2026
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Enough to support more sales
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Not enough to trigger price drops similar to 2008
Mortgage Rates
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Expected range: 5.9% – 6.9%
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Yearly average: ~6.4%
What This Means for Buyers
2026 offers something buyers haven’t seen in years:
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More inventory
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More negotiating leverage (especially in the Sun Belt)
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More time to decide
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Flat prices, not runaway appreciation
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A chance to “date the rate” while waiting for future refinance opportunities
When rates approach 6%, expect competition to return quickly.
What This Means for Sellers
Sellers should enter 2026 with a realistic strategy:
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Price correctly from day one
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Expect more competition than in the last three years
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Understand that buyers are payment-sensitive
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Highlight move-in readiness, condition, and value
In tighter inventory markets (like the Northeast and Midwest), sellers still benefit from strong buyer activity—but it’s no longer 2021.
What This Means for Real Estate Professionals
The 2026 landscape rewards:
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Educators
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Strategists
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Neighborhood-by-neighborhood experts
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Advisors who understand the “why” behind the data
Buyers and sellers need clarity more than ever. Agents who can interpret affordability trends, shadow inventory patterns, and regional nuances will lead the market.
The Bottom Line
The 2026 housing market is not a boom or a bust. It’s a reset.
A more balanced, more rational environment where:
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Prices stabilize
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Mobility unlocks
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Inventory normalizes
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Buyers regain power
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Sellers adjust expectations
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And the market finally begins transitioning into a healthier long-term cycle
For anyone planning a move this year whether buying, selling, or both- the story of 2026 is simple:
There is opportunity on both sides of the table if you understand where to look.
