A More Balanced Housing Market Emerging

NEW YORK — Question: I’m thinking of moving this year, but I’m not sure about the market for buying and selling a home in 2026. What do you think this year will be like for the housing market, and what advice do you have for buyers and sellers?

Answer: After several years of upheaval characterized by bidding wars, rising mortgage rates and tight inventory, the housing market seems to be at a crossroads. Interest rates have stabilized, the number of homes for sale is growing, and price appreciation is slowing.

The big question for wannabe homeowners and hesitant sellers who have been sitting on the sidelines: Is 2026 the year to finally make a move?

The answer, cautiously, may be yes, as three factors signal modestly good news ahead for the real estate market.

Although not the sharp drop buyers had hoped for, mortgage rates lately have been at their lowest level in 18 months – 6.1% for a 30-year fixed-rate loan as of late January, Freddie Mac reports, down from just under 7% a year earlier.

And rates are expected to hover in a narrow band between 6.3% and 6.4% all year, according to forecasts from Realtor.com and the Mortgage Bankers Association.

Meanwhile, the number of homes on the market has been climbing. The latest data from the Federal Reserve Bank of St. Louis shows there were 976,833 active listings in the U.S. in December 2025, a 12% increase from a year earlier.

As supply increases, price appreciation is expected to slow, continuing a trend that started last year.

Realtor.com forecasts a 2.2% increase in the median price of an existing home for 2026, similar to the 1.9% boost Zillow is forecasting. That’s significantly lower than the 6.5% average annual price gain from the boom years of 2013 to 2019 and 4.5% in 2024.

The combination of stable mortgage rates, increased inventory and slowing price appreciation should help ease the recent squeeze on affordability.

The share of median income needed to make a typical mortgage payment for a median-priced home is expected to dip to 29.3% this year, the first time in four years it would be below the 30% threshold considered affordable, Realtor.com reports.

Meanwhile, Zillow expects a typical mortgage payment won’t exceed 30% of the area’s median household income in 20 of the nation’s 50 largest metro areas by the end of the year – the most since 2022.

"For buyers who have been forced to the sidelines, this offers a glimpse of relief," says Orphe Divounguy, Zillow’s senior economist. "Owners waiting to sell are in a better position too, as improving affordability brings more buyers to the market."

Thinking about buying or selling a home? Experts suggest these moves.

For prospective buyers

Don’t try to time the market: "It’s a fool’s errand," says Jake Krimmel, senior economist at Realtor.com. With the market expected to stay relatively stable for the rest of the year, waiting for the perfect conditions doesn’t make much sense – the conditions you’re seeing now will likely be pretty much the same conditions you’ll find months from now.

Compare mortgage rates: Nearly seven in 10 mortgage shoppers submit only one application, according to Zillow. That’s a mistake, especially since you can’t count on rates dropping further this year to save money. But rates do vary from lender to lender, with the difference between the highest and lowest rate offered averaging a full percentage point, a recent LendingTree study found. Average savings from shopping around: $222 a month, or $80,024 over the life of a 30-year loan.

Cast a wider net: If affordability is an issue, consider a fixer-upper or a home farther from your workplace. "You have to be willing to sacrifice," says Mike Miedler, president and chief executive officer of Century 21 Real Estate. "Consider markets that are more affordable, especially if you’re a remote worker."

Return to basics: No matter what the market conditions, resist the temptation to spend too much on a house. "Before you start shopping for a home, set a budget, and make sure you can afford the payment over the long haul," says Mike Fratantoni, chief economist at the Mortgage Bankers Association.

For sellers

List sooner rather than later: As inventory increases, prices in your area may fall. And with buyers having more homes to choose from, competition among sellers will grow, meaning that you may need to be flexible on your sales price or offer incentives, such as an interest rate buydown, to close the deal.

Price competitively: "If you overprice your house, it’s just going to sit there," says Pam Liebman, president and chief executive officer of The Corcoran Group. "Forget your peak-era expectations from 2021, when we had crazy COVID-19 pricing." The days of multiple bids and houses selling above the asking price are over in most markets. Look at the prices of comparable homes in your area that have sold recently and list yours at or slightly below the average to attract the greatest number of potential buyers.

Get your house show-ready: Buyers lately have been looking for homes in move-in condition, which is one reason the share of new home purchases rose to 16% last year, a slight increase from 2024 and, overall, a level last seen in 2006, says the National Association of Realtors®. To attract buyers and better compete with new construction, make sure you complete any necessary repairs or cosmetic upgrades before listing, and consider having your home professionally staged.

Use your advantage: Many older adults plan to downsize to smaller homes and condominiums when they sell. Often, says Eric Rollo, vice president of Greater Boston and Cape Cod at The Agency, downsizers have a huge edge over competing buyers, who are commonly cash-strapped first-timers: substantial equity in their current home that they can tap for a large down payment or an all-cash deal. If that describes you, make sure that’s clear to the real estate agent and homeowner of any property you’re interested in buying – especially if that seller is eager for a quick deal.

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