Housing News

Will Mortgage Rates Fall? Will Home Prices Keep Rising? What to Expect in 2026

Will mortgage rates finally fall below 6%? Will home prices come down? Will more homes go up for sale in 2026? These are some of the big questions facing the housing market as we move into 2026.

The good news is the housing market is expected to be a bit rosier in the year ahead. While challenges will remain, real estate experts anticipate buying a home will become a little more affordable to do in the new year.

“For many buyers who have spent years navigating limited options and steep competition, a balanced market with more choices and slightly lower cost burdens can be a game-changer, even if conditions remain far from easy,” said Realtor.com Chief Economist Danielle Hale in a statement.

It may be a good year for homeowners as well. More homeowners may be able to save some money each month on their mortgage payments by refinancing their loans.

“We’re moving toward a more normal market,” said New American Funding’s Chief Investment Officer Jason Obradovich. “[It] will open more opportunities for buyers and homeowners to refinance.”

So, what should you expect in the housing market in 2026?

Mortgage interest rates to stay in the low 6% range, but could dip into high 5% territory

Many real estate economists expect that mortgage interest rates won’t budge much in the year ahead, remaining in the low 6% range.

However, they could come down to the high 5% range during the year, said Obradovich.

“At some point in 2026, mortgage rates will drop into the 5s,” said Obradovich.

The Mortgage Bankers Association anticipates mortgage rates will bounce around between 6% and 6.5% next year. Realtor.com predicts rates will hover around 6.3%, the National Association of Realtors (NAR) expects they average around 6%, and Zillow doesn’t expect rates will fall below 6% next year.

Lower rates, tamer home price growth, and rising incomes should make housing more affordable in 2026.

“It’s not going to be a big decline, but it will be a modest decline that will improve affordability,” said NAR Chief Economist Lawrence Yun in a statement.

Home prices to tick up ever-so-slightly

Home prices have been steadily rising, getting a large boost during the pandemic. However, price growth has since slowed, with some markets even seeing prices come down a little.

Nationally, existing home prices are expected to continue to tick up in 2026, though not by much. Zillow anticipates a 1.2% rise, Realtor.com expects a 2.2% increase, while NAR predicts a 4% bump.

Zillow expects just 12 of the largest 50 housing markets will experience price declines in 2026, down from 24 in 2025.

“Housing supply has increased in recent months, which will ease home-price growth and provide more housing options for prospective buyers,” said MBA Chief Economist Mike Fratantoni in a statement. “The increase in inventories will put downward pressure on home prices across the country.”  

Home sales to rise in the year ahead

The number of home sales is expected to begin rebounding in the year ahead.

“Housing turnover is only going to improve with lower rates,” said Obradovich.

NAR anticipates a 14% surge in existing home sales in the new year. (Existing homes don’t include new construction.) Zillow anticipates 4.26 million existing home sales, up 4.3% year-over-year.

Realtor.com pegs it a little lower with a 1.7% increase to about 4.13 million sales.

“Next year is really the year that we will see a measurable increase in sales,” said NAR Chief Economist Lawrence Yun in a statement.

Purchase mortgage applications (those used to buy a home) are also expected to increase, growing 7.7% year-over-year in 2026, according to the Mortgage Bankers Association (MBA). Refinance applications are anticipated to rise 9.2%.

More homes to go onto the market

More homes are expected to come onto the market in 2026, giving buyers some additional relief.

Realtor.com anticipates an 8.9% jump in inventory next year. This will put the number of home listings at 12% below pre-COVID-19 norms, down from the 19% gap in 2025.

Builders will continue putting up more homes, with new single-family home starts rising by 3.1% next year, according to Realtor.com’s predictions. (Starts are homes that work has begun on, but haven’t yet been completed.)

This would bring the total up to 1 million new homes.

“The housing market is finally settling into a healthier state, with buyers and sellers starting to return,” said Zillow Chief Economist Mischa Fisher in a statement. “Buyers are benefiting from more [housing] inventory and improved affordability, while sellers are seeing price stability and more consistent demand.”