Economists predict how the housing market will turn out in 2026 amid recent crisis
The affordability crisis has hit the real estate market hard, and economists have stepped in to share their two cents about how the housing market might look in the upcoming year. All of them shared varying insights with both positive and negative predictions. The consensus among everyone is that the current unpredictable nature of the American economy has made it hard to forecast next year’s situation.
As per a report in Real Estate News, the 2026 predictions are dependent on three major factors, namely sales, mortgage rates, and prices. Buying new homes for potential first-time buyers has been an ordeal this year as the prices are through the roof. There is no consensus among economists about things getting better next year. It is important to remember that these are early predictions that may change come the end of 2025.
The report states that the US economy currently finds itself at a point where the job market could soften next year, leading to cooling inflation and more short-term interest rate cuts by the Federal Reserve, or wage growth and tariffs could make prices go up, and once again make it hard for people to buy homes. Bright MLS has adopted an optimistic point of view, which will see a 9% jump in sales.
"While lower mortgage rates and more inventory will bring some buyers back, this will be a reset year, not a rebound year," said Lisa Sturtevant, chief economist at Bright MLS. "Market performance will hinge on local economic conditions, making 2026 one of the most geographically divided markets we've seen in years," she added. However, other organizations like Realtor, Zillow, and Redfin have not even gone past the 5% mark in increased sales.
An important factor when it comes to home ownership these days is the mortgage. Mortgage rates often shape the consumer’s mindset and help them decide if they are ready to buy a house or otherwise. There is a consensus among companies in this regard, which is good news for those interested in buying homes. Bright MLS believes rates will fall to 6.15% next year, while Realtor and Redfin believe it will fall to 6.6%.
Zillow has reported that it is unlikely that rates will drop below 6%, but they will still come down. However, inflation could still cause a major issue. "If a new Fed chair cuts rates now, but there's still inflation, market traders would assume that the Fed will have to increase rates later on to make up for that misstep," Daryl Fairweather, chief economist at Redfin, said, before adding, "But if inflation is lower to justify a rate cut, that could move mortgage rates down and improve home sales."
As far as prices of homes are concerned, economists expect them to increase, but by a negligible amount. The curve is predicted to be mostly flat, with some predicting around a 1-2% increase in prices. However, that doesn’t mean that property prices will be low.
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