Key Highlights
- Home prices are expected to dip in 22 U.S. cities next year, according to a new analysis from Realtor.com.
- Mortgage rates are projected to drop slightly to an average of 6.3% in 2026.
- The shift is seen as moving the market towards a more “buyer-friendly” direction and achieving normalcy since the pandemic.
- Existing-home sales are expected to increase by less than 2% to 4.13 million properties next year.
Housing Market Forecast for 2026: A Buyers’ Market?
The U.S. housing market is undergoing a significant transformation in the coming year, with home prices set to dip in 22 of the largest 100 cities across the country, according to an analysis by Realtor.com. This shift is expected to bring about a more buyer-friendly environment, marking what experts predict will be the most balanced housing market since the pandemic.
Market Trends and Forecast
The outlook for mortgage rates is also encouraging for homebuyers. Jake Krimmel, a senior economist at Realtor.com, highlighted that these changes are part of a broader trend expected to ease some of the financial strain on buyers. “2026 is going to be a year where we think the market is going to steady,” Krimmel told CBS News. “It’s going to show a lot of signs of getting back on track to what we consider to be normal.” This normalization means that neither sellers nor buyers will have an overwhelming advantage in negotiations, creating a fairer balance for both parties.
According to the analysis, mortgage rates are projected to decrease slightly from their current average of 6.6% in 2025 to an estimated 6.3% in 2026. This reduction is expected to encourage more buyers to enter the market, driven by a combination of lower borrowing costs and strong wage growth. “Lower mortgage rates coupled with robust wage growth should provide a significant boost to the housing market,” Krimmel added.
Geographic Impact: Southeast and West Regions
The impact of these changes is most pronounced in certain regions. Most of the 22 cities projected for price declines are located in the southeastern and western parts of the country, with Florida leading the pack. The Cape Coral-Fort Lauderdale metropolitan area is anticipated to experience the largest price decline at 10.2%, followed closely by North Port-Sarasota-Bradenton, which is expected to see a drop of 8.9%.
These declines are attributed to an increase in inventory and reduced buyer demand compared to the height of the pandemic.
“These places, among others, saw a huge frenzy during the pandemic, so part of what we are projecting is that demand continuing to come back down to earth,” Krimmel explained. This means that areas that experienced rapid growth may now be seeing more sustainable price levels as buyer enthusiasm moderates.
Price Increases in Other Areas
While some cities will see declines, the rest of the 100 largest U.S. cities are expected to experience modest increases in home prices, with a median gain of around 4%. This suggests that while overall market conditions may improve, the distribution of price changes is likely to be uneven across different regions.
The analysis by Realtor.com took into account various factors such as inventory levels, new construction, price growth trends, wage and job growth rates, and unemployment figures. These insights provide a comprehensive view of what homeowners can expect in the coming year.
As the U.S. housing market navigates these changes, it’s clear that 2026 is shaping up to be a pivotal year for buyers looking to enter or exit the market. With reduced mortgage rates and more balanced negotiation power, homebuyers may find themselves better positioned in this new buyer-friendly environment.
