After a year marked by fewer home sales, stagnant home prices, and mortgage rate drops, many are speculating about what might happen to the housing market over the next 12 months. In this article, we’ll look at housing market predictions for 2026 from industry experts, including where mortgage rates, home and rent prices, and home sales might be headed!
Summary:
2025 saw stagnant and even falling home prices across the US, but this wasn’t true for all markets. Southern states like Texas and Florida saw regular price cuts, while the northeast saw some price growth. Meanwhile, mortgage rates dropped from nearly 7% at the start of the year to the low-6% range by Q4.
Mortgage rates remain relatively high, contributing to a “lock-in effect” where homeownership is less affordable and sellers are reluctant to give up the 3% mortgage rates they secured in 2020-2022. With that said, we saw rates ease in 2025, and many experts are expecting them to hold:
It’s unlikely we’ll see 5% mortgage rates in 2026, but Zillow doesn’t anticipate them rising beyond the low-6% range we saw by the end of 2025.
Mortgage rates averaged 6.6% in 2025, but Realtor expects them to average around 6.3% throughout 2026.
Redfin is in lockstep with Realtor when it comes to mortgage rates, expecting them to hold around 6.3% for the year.
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Historically, home prices tend to increase in the long run. However, home prices have largely stalled out and even declined in some markets, leading some to speculate that we’re not just experiencing a housing correction but heading towards a housing crash. This would be cause for alarm, but experts have a very different outlook on home prices in 2026:
By October 2025, home prices had fallen in 24 of the 50 largest markets, but Zillow expects prices to stabilize in 2026, cutting that number in half.
If home prices increase by 2.2%, this could mark the second year in a row where inflation outpaces home price growth.
Redfin anticipates modest price growth of just 1% in 2026, but this rate could be eclipsed by wages, improving affordability for homebuyers.
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Total home sales plummeted in 2022 (coinciding with rising mortgage rates), and we’ve seen little improvement year over year. However, experts are optimistic that more homes could change hands over the next 12 months:
Zillow is predicting a 4.3% increase in home sales, assuming that mortgage rates hold (or decrease) and wages rise.
Existing-home sales reached their 30-year low in 2025, but Realtor is forecasting a modest increase in 2026.
Redfin lands somewhere in the middle with their 2026 housing market forecast, as they anticipate roughly 3% more home sales.
Rent growth has slowed significantly after surging in 2021-2022. Here’s where experts are predicting rent prices could be headed in the year ahead:
Renting could continue to be the more affordable housing option this year, with wages outpacing stagnant multifamily rent prices. Fortunately for turnkey investors, single-family rent prices are projected to climb 2.3%.
With multifamily construction driving supply up, Realtor expects rents to decline—continuing a two-year trend.
Redfin has a slightly more optimistic take on rent price growth, claiming apartment construction will slow, driving up both rental demand and rent prices.
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It’s almost always a good time to buy a rental property, as the sooner you start, the longer runway you’ll have for long-term appreciation, tenant loan paydown, and all of the other benefits of owning real estate. Now is an especially good time to invest in real estate due to these factors:
The prices of goods continue to increase, which means you need to invest in assets that can outpace inflation. You can double dip with rental properties, since both home prices and rent prices tend to rise over time!
Higher mortgage rates have curbed demand recently. With fewer buyers competing for properties, you could negotiate a lower purchase price and/or concessions to get your next deal at a discount!
Home prices have stagnated in the last year, creating a rare opportunity for you to buy the dip before home prices (presumably) go up. While you might have a higher mortgage rate today, you could refinance once rates drop.
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Despite inventory rising, the U.S. housing market is still millions of units short—an issue that likely won’t be resolved for several years. Buying rental properties today allows you to capitalize on current and future demand.
What will actually happen to the housing market in 2026? No one knows for certain, but here are three very reasonable scenarios that could play out:
With Americans in a home affordability standoff, we’ll need mortgage rates, home prices, and/or wages to change before the housing market heats back up. In the meantime, home prices and rates could continue to stagnate.
Inflation fears still abound in 2026, and mortgage rates could rise (via worried bond investors), causing fewer buyers to enter the market, resulting in less demand for houses and lower home prices.
Barring a major recession or economic crisis, mortgage rates may only drop slightly. However, this would be enough to entice buyers and shift the current buyer’s market to a more balanced one.
Amid economic uncertainty and a sputtering housing market, could we be headed for a crash? While signs like growing inventory, rising unemployment, and high consumer debt have some people nervous, an actual housing market crash is still very unlikely as it currently stands.
Check out our in-depth article on whether the housing market will crash in 2026!
Whether the housing market rebounds or stagnates in 2026, real estate investing is a proven long-term strategy for building wealth. Like other investments, more time in the market beats trying to time the market!
What’s more, you don’t need to be a full-time landlord to invest in real estate, as Rent to Retirement has turnkey properties in over a dozen markets across the U.S. These are new builds and recently renovated properties that often come with property management already in place, giving you more passive income and allowing you to scale your portfolio faster!
It’s uncertain whether house prices will rise or fall in 2026. However, some industry experts are forecasting home prices to increase by roughly 1% - 2.5% this year.
Mortgage rates eased in 2025, falling from the upper-6% range to the lower-6% range by the end of the year. Many experts believe rates will continue to hover around the low-6% range throughout 2026.
It’s impossible to know whether we could experience a recession and/or a housing market crash in 2026. However, current signs point to this lull in the housing market being a correction rather than the beginning of a full-blown market crash.