Will the Housing Market Crash in 2026?

Will the housing market crash in 2026, or are we just experiencing a prolonged correction? In this article, we’ll break down the similarities and differences between current market conditions and those leading up to the 2008 housing market crash. We’ll also share what experts forecast for the housing market in 2026 and why many investors believe now is the time to buy!

Summary: 

• A housing market crash is a sharp decline in home prices of 20% or more, while a housing market correction is a gradual decline of up to 10%.

• Rising unemployment, growing inventory, and high consumer debt may precede a housing market crash, but a true crash usually requires steep price declines and forced selling.

• Many experts are forecasting price growth and more home sales in 2026, meaning now could be a great time for investors to buy properties.

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What is a Housing Market Crash?

A housing market “crash” is a steep, rapid decline in home prices, usually of 20% or greater. A housing market “correction,” on the other hand, is often characterized by a home price decline of up to 10%. The last “crash” in the US was the 2008 housing crisis. The Case-Shiller Index, which tracks the purchase prices of residential homes, shows a decline of over 25% during that period.

Source: https://fred.stlouisfed.org/series/CSUSHPINSA

Signs the 2026 Housing Market Could Crack

It’s fair to say we’re experiencing a housing market correction, as home prices have stagnated or fallen in some markets. While the following factors might suggest that a 2026 housing market crash is within the range of outcomes, there’s important context to consider:

Rising Unemployment

High unemployment typically means fewer people can afford to buy homes and pay their mortgages. As homes sit on the market and many are foreclosed on, the rapid increase in supply can cause home values to fall. Unemployment is still relatively low in 2026, but it is rising.

Source: https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

Rising Housing Inventory 

An oversupply of properties tends to drive home prices down. Housing inventory has risen well above pandemic levels in recent years, but it is still below even 2017 standards.

Source: https://fred.stlouisfed.org/series/ACTLISCOUUS

High Consumer Debt

Rising consumer debt often means more Americans are struggling to pay bills, including their mortgages. While housing debt is steadily rising, mortgage delinquency is still at rock-bottom levels.

Source: https://www.newyorkfed.org/microeconomics/hhdc 

While these signs are worth watching, they do not constitute a housing crash. These issues would need to worsen, and several other dominoes would need to fall before a crash becomes a major concern.

2026 vs. 2008: The Key Differences 

While the housing market may be correcting, we’re unlikely to see a housing crash like the one we saw back in 2008. There are multiple reasons for this:

1. No More Mass Subprime Mortgages 

The 2008 housing crisis was largely caused by risky lending practices, where mortgages were given to deep subprime borrowers (those with credit scores below 580), with banks speculating that home prices would continue to rise. This is very different from recent years, where subprime mortgages have hovered around their historical low.

Source: https://www.consumerfinance.gov/data-research/consumer-credit-trends/mortgages/borrower-risk-profiles/

2. Minimal Homeowner Distress 

Forced selling drove the 2008 housing crash, as overleveraged borrowers with high mortgage payments (and floating interest rates) and either low or no income were foreclosed on. Today, more than half of homeowners have rates at or under 4%. Combine this with the high creditworthiness shown in the previous section, and it’s hard to see any forced selling. 

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3. Low Foreclosure Rates

We had mass foreclosures in 2008, but today, delinquency rates remain very low for residential mortgages. They rose slightly following the moratoriums of 2020, but are still a fraction of what they were in 2008.

 Source: https://fred.stlouisfed.org/series/DRSFRMACBS

Will the Housing Market Crash in 2026? What Experts Say

What’s the likelihood of a housing market crash in 2026? Let’s take a look at what industry experts are saying about the potential of a crash:

Zillow: “Housing market will warm up in 2026, with more sales and modest price growth.”

As of December 2025, Zillow is forecasting a modest 1.2% increase in home values for 2026, causing fewer homeowners to lose equity in their homes. Experts also expect 4.26 million home sales, a 4.3% increase from 2025.

Redfin: “The Great Housing Reset will take shape in 2026.”

Redfin anticipates more home sales in 2026, a 3% improvement from 2025. Home affordability is also expected to improve, with mortgage rates dipping to the low-6% range and rising wages slightly outperforming rising home prices.

Realtor: “Price growth steadies, rate relief offers breathing room.”

Realtor expects interest rates to hold around 6.3% in 2026. While median home prices could appreciate by 2.2%, giving current owners more home equity, experts also foresee incomes outpacing both inflation and home prices—making homeownership more affordable for many.

Why Smart Investors are Buying Now

While higher interest rates and stagnant home prices are currently keeping many buyers in limbo, smart investors are still buying rental properties in 2026. Here are some key reasons why:

Less Competition, Better Deals

In hot markets, investors have less negotiating power and may even need to offer over asking to buy a property. Since fewer buyers are competing for properties today, it’s significantly easier to find great real estate deals at a discount!

Builder Concessions 

Housing inventory is up, so some builders are offering concessions in order to offload some of their properties. Get a lower purchase price, cash back at closing, lower closing costs, or an interest rate buydown with Rent to Retirement’s exclusive new build incentives!

Declining Mortgage Rates

While mortgage rates haven’t returned to the low levels we saw back in 2020-2021 (which we may never see again), they have steadily decreased since spiking in 2023. You could buy at a great price today and refinance if rates continue to fall!

Growing Housing Demand 

The US is short 4.7 million homes. Meanwhile, homeownership is still unattainable for many Americans, creating strong demand for long-term rentals. Home values have decreased in some markets, but have a long track record of increasing over time, so buying the current dip could allow you to benefit from the appreciation.

Signs of a Housing Market Crash

Before a housing crash, several concerning signs begin to emerge. It’s worth noting that none of these things have occurred yet:

• Unemployment begins to spike
• Borrower credit scores begin to tank

• An economic black swan event unfolds

• Housing inventory overtakes our 4.7 million shortage

• Population begins to rapidly decline

• Mortgage delinquency begins to spike

Signs Point to a Healthier Housing Market: Are You Taking Advantage?

With many industry experts believing the housing market is much more likely to rebound than collapse in the years ahead, now could be a great time to invest in real estate. The best part? You don’t need to be an expert! Turnkey rentals make it easy for anyone to invest in cash-flowing real estate.

Rent to Retirement operates in over a dozen different markets, including some of the best places to buy rental properties, with homes that often come with property management and tenants already in place. This allows you to invest in real estate passively (or semi-passively) and lock in returns that meet your financial goals—without giving you another job!

Will the Housing Market Crash in 2026 FAQs

What Will the Housing Market Be Like in 2026?

Many experts are forecasting home price growth, more sales, and mortgage rates that hold steady (or ease slightly) in 2026. This means you could buy a property at a great price today and refinance down the road, all while taking advantage of future appreciation!

Is a Recession Coming in 2026?

It’s impossible to know whether a recession will arrive in 2026, as most recessions are only called after they have occurred. However, some economists expect a turbulent economy due to AI, tariffs, rising consumer debt, and other issues.

Will House Prices Go Down by 2027?

The median price of homes sold has decreased slightly since late 2022 due to factors like high mortgage rates and decreased buyer demand. However, simple supply and demand suggests that if mortgage rates drop (increasing demand) but supply remains the same, or demand outpaces supply, a significant price drop is unlikely.