As 2025 winds to an end, Buyers and Sellers alike are considering options for 2026. Windermere Principal Economist Jeff Tucker shared his perspective on the 2026 housing market, offering predictions for the coming year. Here are our key takeaways from his thoughts:
-
Existing Home Sales Slightly Increase
Home sales have been low for three years. While a sharp rebound is unlikely, Sellers can expect a modest uptick in 2026. Inventory levels are much higher than they’ve been since 2019, and mortgage rates are lower than they’ve been since 2022. Together, those factors should lift existing home sales!
-
Home Prices Will Be Roughly Flat
Home prices are likely to remain flat in 2026, largely due to higher inventory putting downward pressure on values. Sellers have been highly responsive to market shifts, often de-listing when offers fall short or holding off on listing altogether. That restraint has kept prices from falling further despite growing supply.
-
Inventory Will Climb to Pre-Pandemic Levels
The number of homes for sale will likely return to pre-pandemic levels in 2026, possibly as early as spring. Inventory rose sharply in 2025, and a “shadow supply” of homes—those whose owners are waiting for better conditions—remains in the wings. Many “discretionary sellers” will continue testing the market, holding out for the right price. That behavior should extend average time on market and boost total listings, giving Buyers more options and negotiating power.
-
The Homeownership Rate Will Decline
At current prices and interest rates, homeownership remains out of reach for many middle-class Americans who would have bought in different conditions. Slower rent growth has also reduced urgency among would-be Buyers, encouraging them to stay put. More renters are opting for single-family homes to enjoy the space and lifestyle of ownership without a mortgage, a shift that will help push the overall homeownership rate slightly lower.
-
Mortgage Rates Will Decline Slightly
Mortgage rates should remain below 6.25% for most of 2026 and could briefly dip under 6%. The Fed’s rate cuts and slower growth have brought 10-year Treasury yields near 4%, while the spread between Treasuries and mortgage rates has narrowed toward its normal range of 2% or less. That trend is expected to continue as refinance risk on mortgage-backed securities gradually fades, but much of the improvement is already reflected in current rates, so significant declines are unlikely.
-
Avoiding a Recession in 2026
The U.S. economy weathered several shocks in 2025 but avoided a downturn. Payroll gains have slowed, though more due to shrinking labor supply than weak demand, and unemployment claims have remained stable. After early trade policy turbulence, corporate earnings rebounded strongly, and tariff concerns have faded as court challenges and new trade deals rolled back some of the costliest restrictions.
Learn more and watch Jeff speak about his predictions in this video.