NAR Forecast Sees 2026 Market Rebound

CHICAGO – Top economists have one word to sum up the housing market for 2026: opportunity. Lower mortgage rates and a rising supply of homes are expected to open up the housing market in the new year—something the real estate industry and potential home buyers and sellers have been waiting for, following three years of stagnation.

The National Association of Realtors® is forecasting a double-digit—14% increase—in existing home sales for 2026.

“In 2026, we expect higher inventory, modest improvements in affordability and more accommodating monetary policy from the Federal Reserve will help more Americans buy their next home,” said Lawrence Yun, NAR’s chief economist, during the virtual “Real Estate Forecast Summit: The Year Ahead” on Tuesday.

If mortgage rates drop to 6% — as NAR projects for 2026 — it would mark a full percentage point drop from the roughly 7% average at the start of 2025. That shift could unlock an estimated 5.5 million additional qualified home buyers nationwide, including about 1.6 million renters, who could finally make the leap into homeownership.

“Lower mortgage rates will save the day” for the housing market next year, Yun said. They’ll help improve affordability, but meaningful progress will also depend on increased housing inventory to create more opportunities for buyers and sellers in 2026, he said.

5 ways to get your business ready

Nadia Evangelou, NAR senior research economist and director of real estate research, pointed to several ways real estate pros can prepare for the projected uptick in sales.

1. Target the new pool of rate-qualified buyers.

A one-point mortgage rate drop can significantly expand the buyer pool — especially among renters, younger households and high-earning millennials who may have been previously priced out. “Reach out to buyers who may have stepped back from the market” because they may be in a better position to re-enter if rates drop to 6%, Evangelou said.

2. Price strategy matters more than ever.

As affordability has been stretched, buyers are ultra-focused on their house payment, Evangelou said. “Homes priced even 3–5% above market will face longer days on the market and deeper eventual reductions,” NAR’s report notes. Real estate pros will need to guide sellers on realistic pricing to result in a faster sale and stronger final sales price. “Well-priced homes will stand out in the market immediately,” Evangelou said.

3. Watch the inventory mix.

Mid-priced homes that better align with household incomes will drive demand in 2026. Evangelou noted that middle-income buyers can now afford only 21% of listings nationwide, down from 50% pre-pandemic. Markets that are seeing greater availability of mid-priced homes are better positioned for recovery. For example, Evangelou noted that places like Raleigh, N.C., have shown improvement as their inventory has become more closely aligned with local income levels.

Builders are also starting to respond to the affordability gap. Townhomes — often a more attainable option for entry-level buyers — comprised 18% of single-family housing starts in the second quarter of 2025 — nearly double their share from a decade ago, said Robert Dietz, chief economist at the National Association of Home Builders.

4. Migration patterns remain a driving force.

Metros in the South, Mountain West and many Midwestern regions continue to attract new residents, and areas with higher migration are likely to see stronger home sales as a result. “Knowing where your buyers are coming from and why is essential,” Evangelou said.

5. Expect meaningful — but uneven — demand.

Even with a projected 14% national increase in home sales, recovery will vary greatly by market. “Demand will improve, but not everywhere the same,” Evangelou said. “The recovery will be concentrated where housing and incomes are coming closer together.” The alignment—between affordability, job growth and buyer demand—will determine which metros see the biggest swings in 2026. NAR economists identified several key indicators that tend to drive market momentum and pinpointed 10 emerging homebuying hot spots for 2026.

Keep an eye on these 10 metrics in your local market, which could lead to stronger home sales in your area in 2026:

• Household income growth
• Job growth
• Millennial household growth
• Increase in rate-qualified households if mortgage rates dip to 6%
• Strong domestic migration that drives population growth
• Share of sales with price reductions that shows how close seller expectations align with buyer budgets
• More listings available at attainable price points
• Mortgage and rent payment alignment
• Single-family permit growth
• Growth in mortgage originations as a key indicator of strengthening buyer activity and transaction volume

© 2025 National Association of Realtors® (NAR)