As we start the new year, hopes are high for a rebound in the housing market. The reality could be different.
Redfin, the online real estate service, is calling 2026 “The Great Housing Reset,” describing it as the start of a “new era” for home building and homeowners alike. CNN, in pulling together a cross-section of forecasts and predictions about the market for the new year, largely comes to the same conclusion although there are caveats about overall conditions.
“Next year may mark a turning point for the US housing market,” CNN wrote. “After several years in a deep freeze, with high borrowing costs and soaring prices locking many Americans out of homeownership, economists say conditions may begin to shift in 2026, with many economists optimistic about the housing market. Many anticipate that rising incomes will start to outpace home prices, making homes feel more affordable for many Americans.”
Even as it expressed concerns about potential government policies having much of an impact on the overall housing market, there are several compelling arguments to be made for a revival, which would benefit the entire home-building field.
“In the next era, we’ll have sufficient inventory on the market across the country, allowing sales to increase,” said Mike Simonsen, the chief economist at Compass, another online real estate platform. But it won’t mean appreciable changes in housing prices. “We’re forecasting a half a percent increase in home prices next year, which is essentially flat,” he said. The best way to make homes more affordable long term would be to build more homes,” Simonsen noted.
Many sellers have been unwilling to give up the ultra-low mortgage rates they locked in years ago and have held off on listing, he said. But as homeowners adjust to rates above 6 percent, more may decide it’s time to sell in 2026, adding inventory to the market and easing price pressure.
Whatever happens, CNN concluded, it will largely be market-driven and not the result of any federal government initiatives. “We believe there are limits on what the President can do in 2026 to boost housing,” Jaret Sieberg, a housing policy analyst at TD Cowen wrote to clients in a note earlier this month, CNN reported.
