The U.S. housing market is showing signs of a modest recovery in 2026, with experts forecasting a slight increase in sales activity, a gradual rebound in inventory, and a stabilization of affordability conditions. This comes after a challenging year in 2025, where elevated mortgage rates and constrained supply dampened the housing market’s momentum. Industry analysts are cautiously optimistic that these conditions will ease in 2026, creating new opportunities for real estate professionals and buyers alike.
Lawrence Yun, Chief Economist at the National Association of REALTORS®, notes that increased housing listings and shifting demand patterns are likely to drive more transaction activity throughout the year. The market, which was heavily impacted by high mortgage rates and a lack of housing supply in 2025, could find a new equilibrium in 2026, making it a more balanced environment for both buyers and sellers. As the housing inventory slowly increases, more options for potential buyers should help alleviate some of the challenges of recent years, such as bidding wars and limited choices.
In addition to improved inventory levels, the slight easing of borrowing costs is expected to positively impact homebuyers’ purchasing power. While mortgage rates remain above historical lows, the incremental reduction in rates could make homeownership slightly more affordable, especially for first-time buyers who have faced significant hurdles in recent years. This improvement in affordability could encourage more buyers to re-enter the market, particularly those who had been sitting on the sidelines due to financial constraints.
Zillow economists also predict a modest increase in home values, reflecting the steady demand for homes despite the challenges faced by many buyers. While home prices are not expected to skyrocket, the gradual upward trend should help sellers who had been hesitant to list their properties during the previous year’s volatile conditions. With inventory levels projected to rise and competition for homes expected to moderate, the market could shift in favor of both buyers and sellers, making transactions more fluid and less competitive than in 2025.
Multifamily rental markets are anticipated to stabilize as well, providing relief for renters who have experienced rising rents in recent years. With rental prices having surged due to limited inventory, the stabilization of rental markets will offer a more predictable environment for tenants and landlords, helping to balance supply and demand in the multifamily sector. This trend could provide additional opportunities for investors and property owners to operate in a more stable market.
Overall, the housing market outlook for 2026 suggests a transition toward a more balanced and less volatile market. While challenges such as affordability concerns and relatively high mortgage rates may continue to influence buyer behavior, the increase in listings and slight improvements in borrowing conditions could create a more favorable environment for those looking to buy or sell. Real estate professionals can expect a busier year ahead, with more opportunities for transactions, as the market begins to stabilize and adjust to the evolving economic landscape.