1. Mortgage Rates Will Stay Above 6%

Most leading forecasters expect 30-year fixed mortgage rates to remain above 6% throughout 2026. While that’s still elevated by historical standards, it would represent a modest improvement from the 2025 average of roughly 6.6%.

Current projections from financial institutions include:

• Capital Economics: 6.5%

• MBA: 6.4%

• Compass: 6.4%

• Realtor.com: 6.3%

• Redfin: 6.3%

• NAHB: 6.2%

• Wells Fargo: 6.18%

• NAR: 6.0%

• Bright MLS: 6.0%+

• Zillow: 6.0%+

• Fannie Mae: 6.0%

The takeaway: rates are likely to remain restrictive, but slightly more favorable than what buyers faced in 2025.

2. The Luxury Market Will Remain Largely Rate-Proof

The luxury housing market continues to operate under a completely different set of rules than the broader market. Affordability pressures that dominate entry-level housing have far less impact at the high end, where cash remains king. Today, at least half of luxury home purchases are all-cash transactions.

In major metros like New York, Los Angeles, and Miami, million-dollar homes are effectively entry-level. Luxury properties are selling faster even as inventory rises, reinforcing the idea that seven-figure price points are the new normal.

Looking ahead, this segment should continue to support overall housing activity in 2026. Longer term, wealth transfers will further fuel demand. Over the next decade, an estimated $31 trillion is expected to transfer from roughly 1.2 million wealthy individuals to heirs, particularly Millennials and Gen X. That shift will play a major role in luxury housing demand for years to come.

3. Home Prices Will Rise—But Modestly

Home price forecasts for 2026 vary widely because pricing remains highly dependent on local supply, demand, and buyer sensitivity to interest rates. Still, most analysts agree that price growth will be muted.

The majority of forecasts call for appreciation between 0.5% and 2.0%, making this an important context to emphasize with buyers and sellers who may have unrealistic expectations for rapid price gains.

Here’s how forecasters see price growth shaking out:

• Cotality: +4.3%

• NAR: +4.0%

• Wells Fargo: +3.5%

• Realtor.com: +2.2%

• Capital Economics: +2.0%

• Fannie Mae: +1.3%

• Zillow: +1.2%

• Redfin: +1.0%

• Compass: +0.5%

• MBA: -0.3%

4. Housing Inventory Will Continue to Increase

The rate-lock effect—where homeowners are reluctant to sell because of low existing mortgage rates—will continue into 2026. However, its grip on the market is expected to loosen.

Most analysts agree inventory will keep rising next year, building on momentum already underway.

Top projections include:

• Compass: +10% to +15%

• Bright MLS: +10.9%

• Realtor.com: +8.9%

While inventory levels will still remain below pre-pandemic norms, the direction is clearly upward.

5. New Construction Will Gain Market Share

This trend appears all but certain. Homebuilders are steadily increasing their share of total sales by offering aggressive buyer incentives, including rate buydowns and below-market financing.

Large builders such as Lennar and D.R. Horton continue to prioritize sales pace over pricing, and there’s little reason to believe these incentives will disappear soon. As a result, smaller builders are likely to follow suit, making new construction an increasingly attractive option for buyers in 2026.

6. Home Sales Will Increase—but Stay Below Historical Norms

Yes, home sales are expected to rise next year, with projections averaging about 4.24 million transactions. However, that number remains well below long-term historical averages.

For context, the past 20 years have seen an average of 5.15 million annual home sales, with a peak of 7 million in 2005.

Projected percentage increases in home sales for 2026 include:

• NAR: +14%

• Bright MLS: +9.0%

• Fannie Mae: +7.8%

• MBA: +6.3%

• Zillow: +4.3%

• Compass: +4.0%

• Realtor.com: +1.7%

The recovery is real—but it’s gradual.

7. Investors Will Remain Active Buyers

Despite higher rates and rising expenses, investors are not stepping away from the market. According to a recent ResiClub and LendingOne survey, 68% of single-family rental investors say they are likely to purchase another property in the next 12 months.

Rather than retreating, investors are recalibrating. Many are selling underperforming assets, tightening underwriting standards, and adjusting for higher insurance and operating costs. But their appetite for well-priced, cash-flowing opportunities remains strong.

This is a major opportunity as investors will continue to be a meaningful source of transactions in 2026, especially for those who can structure the right financing, realistic returns, and clearly underwritten deals.

Bottom line: 2026 won’t be a boom year—but it will be a more balanced, more rational market. Those who understand the data and adjust expectations will be best positioned to win market share.