2026 housing market predictions, according to Redfin
U.S. homebuyers will start to get some relief in 2026, with affordability improving as income growth outpaces home-price growth. Next year will mark the beginning of a long, slow recovery for the housing market.
“The Great Housing Reset” will take shape in 2026. It won’t be a quick price correction, and it won’t be a recession. Instead, the Great Housing Reset will be a yearslong period of gradual increases in home sales and normalization of prices as affordability gradually improves. It will start next year, with incomes rising faster than home prices for a prolonged period for the first time since the Great Recession era.
It won’t be enough to make homebuying affordable in the short run for Gen Zers and young families, who will be forced to make tradeoffs, from moving in with roommates or their parents to delaying having children. Politicians on both sides of the aisle will respond to the widespread housing affordability crisis, introducing policies to lower costs, including YIMBY measures and expanded manufactured housing. Some of those proposals will chip away at affordability, but they won’t be an instant fix.
Here are Redfin Real Estate’s 2026 housing market predictions.
Prediction 1: Mortgage Rates Will Dip to Low-6% Range, One Factor Improving Affordability
Mortgage rates will continue their slow slide but remain high relative to the pandemic era. The 30-year fixed rate will average 6.3% for the entire year, down from its 2025 average of 6.6%.
A weaker labor market will lead the Fed to cut interest rates in 2026 and bring monetary policy to a more neutral place, which should keep mortgage rates in the low-6% range. But lingering inflation risk and the likelihood that we’ll avoid a recession will keep the Fed from cutting more than the markets have already priced in. That’s why rates may dip below 6% occasionally, but not for any meaningful period.
The Fed will change leadership in 2026, but that is also unlikely to bring significantly lower mortgage rates, as long-term rates—like mortgage rates—are set by bond markets.
Prediction 2: Homebuying Affordability Will Improve As Wages Grow Faster Than Prices
Redfin expects the median U.S. home-sale price to rise 1% year over year in 2026. Prices will tick up only marginally because still-high mortgage rates and prices, along with a weaker economy, will curb demand.
Homebuying will become more affordable because home prices will grow more slowly than wages for a sustained period for the first time since the aftermath of the financial crisis. The small price increase combined with mortgage rates dipping lower than they were in 2025 means monthly housing payments will grow more slowly than wages, too.
Slow demand has historically caused prices to fall. Redfin doesn’t expect that to happen in 2026 because sellers will pull back, too. That’s largely because many would-be home sellers have enough equity to avoid falling behind on their mortgage payments. Mortgage-delinquency rates are low, and most homeowners will be able to wait until the housing market further recovers to list their home.
In the past, the same economic forces limiting homebuying demand also forced many homeowners into distressed sales, but today’s homeowners tend to have good credit, a lot of equity, and low rates, putting less pressure on potential sellers than on buyers.
The improvement in affordability will be significant enough to lure back some house hunters, but homebuying will remain out of reach for a lot of sidelined buyers. Gen Zers and young families will feel the pinch of still-high costs, with many of them opting for nontraditional living situations to afford housing.
Prediction 3: Home Sales Will Rise 3%
Redfin predicts that sales of existing homes will end 2026 up 3% from 2025, with sales coming in at an annualized rate of 4.2 million.
Redfin expects a stronger spring homebuying season in 2026 because mortgage rates were sitting around 6.8% during the spring of 2025—meaningfully higher than the 6.3% rates we’re predicting this year.
Sales will increase only slightly because affordability will improve just enough to lure some on-the-fence buyers. Many house hunters will remain priced out and/or limited by a stalled labor market, including some Americans who have lost their job—or fear losing their job—as AI takes a toll on the white-collar workforce.
Prediction 4: Rents Will Rise As Demand For Apartments Rises and Supply Falls
Demand for apartments will rise as supply falls in 2026, leading to rising rents in many metro areas. Nationwide, rents will rise about 2% to 3% year over year by the end of 2026, roughly the pace of inflation.
Apartment construction has slowed from its 2021-2022 surge and is expected to continue slowing, meaning fewer apartments are hitting the market and there’s more competition for each one. At the same time, many Americans are renting instead of buying because down payments and monthly mortgage payments are expensive. However, in some areas like South Florida and Southern California, tightened immigration enforcement is likely to put a lid on rental-demand growth.
Prediction 5: High Housing Costs Will Reshape Households, With More Roommates and Fewer Babies
The improvement in affordability won’t be enough to immediately boost homeownership for young families. Gen Z and millennial homeownership rates flatlined last year, which will likely continue.
Household makeup will shift further away from the nuclear family, with more adult children living with their parents and vice versa. Redfin also expects more friends to pool resources to buy homes together, often with prenup-style agreements. The portion of young adults living with their parents is down from its pandemic peak, but is historically high. Roughly 6% of Americans who struggled to afford housing as of mid-2025 moved in with their parents, and another 6% moved in with roommates; those shares will increase next year.
Redfin also expects high homebuying costs to make families smaller. The fertility rate has been gradually declining for years, and it’s expected to continue falling.
More families will renovate their homes to comfortably accommodate multiple generations. In a November Thumbtack survey of more than 100 home renovation professionals, multigenerational features, like separate suites for extended family, were the most commonly cited response when asked to predict the most popular design trend of 2026. Picture a garage that’s converted into a second primary suite for adult children moving back in with their parents. Redfin agents in places like Los Angeles and Nashville say more homeowners are planning to tailor their homes to share with extended family.
Prediction 6: Affordability Crisis Will Unite Policymakers Across Party Lines
Voters in the November election—especially young ones—made it clear that lowering housing costs is their top priority. Not only are sale prices and mortgage rates high, but the total cost of homeownership is rising due to skyrocketing insurance premiums and the likelihood that utility costs will surge due to large-scale AI-driven data centers.
President Donald Trump may declare a national housing emergency to help more Americans afford homes, and other politicians on both sides of the aisle will introduce more policies to help alleviate the housing affordability crisis. The Yes In My Backyard (YIMBY) movement will pick up more supporters across party lines, opening the door for initiatives that increase housing supply: A bipartisan congressional caucus has already proposed legislation, including the Yes in My Backyard Act, and the Build More Housing Near Transit Act is making its way through the government.
Other housing proposals will include zoning changes to make it easier to build accessory dwelling units and home additions. Redfin also expects more states to tackle the housing crisis plaguing their rural residents; some will mirror New York’s focus on building manufactured and modular homes in rural parts of the state.
Sensible policies may start to chip away at the housing affordability crisis, and quixotic proposals like the 50-year mortgage may capture the attention of politicians who want a quick housing fix. But the only thing that will make homes more affordable is time. Housing costs soared much faster than earnings during the pandemic, and while wages will start outpacing home prices next year, it will take about five years for the housing market to return to a semblance of normal.
Prediction 7: More Americans Will Refi and Remodel
Redfin expects U.S. mortgage refinance volume to increase more than 30% annually in 2026, ending the year at a total of $670 billion. More Americans will refinance largely because 20% of mortgaged homeowners have a rate above 6%, and those who bought recently with an elevated rate are chomping at the bit to bring their monthly payments down.
Redfin also anticipates more homeowners to tap home equity to fund renovations. Strong home-value appreciation over the last several years means many homeowners have sizable equity; the typical mortgaged homeowner had $181,000 in untapped equity as of mid-2025. That allows homeowners to take out a home equity line of credit or do a cash-out refinance to fund remodels. For many people, renovating their current home is more appealing and less costly than moving.
Prediction 8: NYC Outskirts, Great Lakes Region Will Be Hot … Zoom Towns Like Nashville and Austin Will Not
Areas close to New York City will attract people who need to commute to the office. The Midwest and Great Lakes regions have wide appeal because they’re fairly affordable and provide relatively safe havens against climate-related events like wildfires and floods. Small and midsized cities are luring recent graduates with affordable rents and opportunities to build stable careers in blue-collar fields, as AI replaces some entry-level white-collar jobs.
The housing markets most likely to heat up in 2026 are NYC suburbs (including Long Island, the Hudson Valley, Northern New Jersey, and Fairfield County, Connecticut), Syracuse, New York; Cleveland, Ohio; St. Louis, Missouri; Minneapolis, Minnesota; and Madison, Wisconsin.
On the flip side, homes will languish on the market in coastal Florida and throughout Texas due partly to natural disasters and surging insurance costs—and partly to pandemic-era remote workers moving back to where their office is located. People who need to sell may be forced to take a loss.
The housing markets most likely to cool down in 2026 are Nashville, Tennessee, San Antonio and Austin in Texas, and Fort Lauderdale, West Palm Beach, and Miami in Florida.
Prediction 9: Climate Migration Will Go Hyperlocal
As climate-driven events like hurricanes and wildfires become more frequent and intense, climate will become a more popular reason to move. But people won’t necessarily make big moves, like from coastal Florida to the Midwest.
Instead, Redfin expects some people living in especially vulnerable neighborhoods to move to less vulnerable parts of the same metro area. For example, Los Angeles Redfin agents say some people plan to leave places like the hills surrounding Malibu or the Pacific Palisades (or not return to places like the Palisades and Altadena after the 2025 wildfires) in favor of flat coastal neighborhoods like Santa Monica or Long Beach. That way, they can keep their job and lifestyle but live in a less vulnerable home. Many people are also shying away from building, buying, and hanging onto homes in climate-risky neighborhoods because insurance costs are sky-high.
This local climate migration could exacerbate inequality. People who can’t afford to leave a vulnerable place like Altadena will be left behind, with a lower local tax base for making climate-resilient investments in the future.
Prediction 10: NAR Will Let Local MLSs Call the Shots, Sparking Consolidation
It’s time-consuming, confusing, and inconsistent for the National Association of Realtors (NAR) to write rules for 500 local multiple listing services (MLSs). NAR will step out of the role of industry rule maker and let local branches create rules about how homes are listed in their markets, something that has already started happening.
NAR, for its part, will focus on advocacy. Putting local MLSs in the driver’s seat will accelerate consolidation with many smaller branches joining bigger networks. This creation of larger, regional MLSs will bring clearer rules, faster innovation, cleaner data, and better experiences for real estate brokers, home sellers, and homebuyers.
Prediction 11: AI Will Become a Real Estate Matchmaker
Generative AI will increasingly help people decide where to move, identifying cities, towns, neighborhoods, and homes that fit users’ budgets and lifestyle criteria. Instead of a typical geographic search, homebuyers will search for precisely what they want and have a back-and-forth conversation with search sites, giving feedback to tailor their search results.
These tools will allow house hunters to find homes with niche features. For instance, Redfin agents expect wellness features to become a defining feature of next year’s high-end housing market; generative AI will help luxury house hunters find homes equipped with advanced air-filtration systems, whole-house water purification, and amenities like meditation rooms and cold-plunge pools.
AI will transform the real estate profession, too, by powering tools that help real estate agents pinpoint the right moment to connect with a customer—and the perfect home to recommend based on the buyer’s preferences.
This story was produced by Redfin Real Estate and reviewed and distributed by Stacker.
