Ready for 2026? Here's what's ahead in real estate

The new year is here, and with it comes a housing market shaped by shifting affordability, steady demand, and a few encouraging signs for buyers who have been waiting on the sidelines. Whether you’re advising first-time buyers, guiding move-up clients, or helping sellers price strategically, staying ahead of the trends will keep you—and your clients—ready for what’s next.

The team at Flagstar Bank has combed through industry forecasts and market research to bring you these Top 10 Housing Market Predictions for 2026:

1. 2026 may mark the start of a “Great Housing Reset”

Many economists expect a multi-year stretch of slowly rising home sales and improving affordability, driven by incomes growing faster than home prices for the first sustained period in years. Fresh off the heels of another interest rate cut, economists forecast rates easing further through 2026, with existing-home sales rising and price growth staying near flat by year-end. Affordability remains a hurdle, especially for younger buyers, while conditions show signs of thawing.

2. Mortgage rates stabilize and may improve slightly

Many forecasters see 2026 as a year of relative rate stability, with averages hovering in the low-to-mid 6% range. A modest decline over the year is possible, which improves affordability and buyer confidence.

3. Buyers will see more starter-home activity

Starter-home sales are trending up alongside housing supply reaching near-decade highs—a meaningful development for first-time buyers. New construction continues to play a larger role as an affordable alternative, with builders motivated to sell and more likely to offer smaller, more attainable product types like townhomes and rowhomes.

4. Home prices will rise—modestly

Forecasts generally point to low single-digit appreciation in 2026 (roughly the 1–2% range), building on similarly modest growth in 2025. With inflation expected to run higher than price gains, real (inflation-adjusted) home prices may soften for a second consecutive year. Certain metros have significantly outperformed since 2019, offering a reminder that local market dynamics still matter.

10 cities home values are outpacing the national average

1. Knoxville, Tennessee
2. Fayetteville-Springdale-Rogers, Arkansas
3. Charleston-North Charleston, South Carolina
4. Scranton-Wilkes-Barre, Pennsylvania
5. Syracuse, New York
6. Portland-South Portland, Maine
7. Rochester, New York
8. New Haven, Connecticut
9. Charlotte-Concord-Gastonia, North Carolina-South Carolina
10. Chattanooga, Tennessee–Georgia