The housing market has been plagued by high prices and weak sales for the past few years. However, conditions are expected to ease slightly for buyers in 2026, a shift Redfin describes as a “reset” year.
The reset is being driven by an increase in housing supply after years of limited inventory, and could push prices down in some markets next year.
Overall, home prices have remained roughly flat over the past two years as new construction increases. And there are already signs that the market is loosening. Realtor.com says builders are offering discounts in markets where homes are sitting on the market longer, negotiations are more common, and the supply of new homes has increased.
That doesn’t mean housing will suddenly become more affordable nationwide. Even though median home prices have increased 25% since 2020, they are still too expensive for many buyers, according to U.S. Census data. 30-year fixed mortgage rates are also expected to remain above 6% in 2026, limiting the amount of relief buyers can expect.
However, in some markets, buyers are gaining more leverage, with builders increasingly taking advantage of discounts and incentives to move inventory, even though overall affordability remains tight.
“The bottom line for 2026 is that it’s going to be a year of transition,” Chris Reis, a broker at Compass in Seattle, told CNBC Make It. “There will be no crash or boom, just a market finding its footing after years of extraordinary turmoil. Buyers will have more choice and bargaining power than ever before since the pandemic.”
What to expect in 2026
Most housing forecasts indicate that the market appears to be stable rather than dramatic. This means that although house prices are expected to rise slowly and mortgage rates may fall slowly, borrowing costs will still make purchases expensive for many households.
Here’s how several leading forecasters expect U.S. home prices to change in 2026.
Meanwhile, 30-year fixed mortgage interest rates are expected to remain above 6% in 2026, as they have been for the past three years. According to Mortgage News Daily, the current average interest rate is about 6.2%. Here’s what leading forecasters expect interest rates to be next year.
While there may not be significant cost savings in home prices or mortgage rates, buyers believe they have more room to negotiate in areas where housing supply is increasing, especially for new construction.
Joel Varner, senior economist at Realtor.com, says that’s because builders who build newly completed homes are more willing to make deals.
“Move-in ready inventory is readily available, and builders are lowering prices and providing incentives to sell,” he wrote in a recent blog post. Such flexibility is less common in today’s housing market, with many homeowners still locked into low mortgage rates with little incentive to sell.
Areas where prices are likely to fall in 2026
Home price trends in 2026 are expected to vary widely by metropolitan area.
Although prices will continue to rise slowly in many parts of the country, prices are expected to remain flat or decline in some large housing markets, particularly in parts of the West and South, according to Realtor.com. In those areas, buyers are likely to find more room for negotiation.
Based on Realtor.com’s 2026 forecasts, the 10 of the 100 major U.S. cities expected to see the biggest year-over-year declines in home prices next year are:
Cape Coral to Fort Myers, FL: -10.2% Northport to Sarasota to Bradenton, FL: -8.9% Stockton, CA to Lodi: -4.1% Raleigh, NC: -3.7% Deltona, FL to Daytona Beach to Ormond Beach: -3.6% Tampa to St. Louis Petersburg to Clearwater, FL: -3.6% Spokane, WA to Spokane Valley: -3.5% Denver, Colorado – Aurora – Lakewood: -3.4% Sacramento, California – Roseville – Arden Arcade: -3.3% San Francisco, California – Oakland – Hayward, California: -2.5%
Realtor.com’s forecast estimates home price changes in 2026, taking into account inventory, mortgage rate expectations, and local economic conditions.
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