After years of sluggish movement, America’s housing market may finally be gearing up for a proper comeback. Real estate professionals are cautiously hopeful that 2026 will bring the kind of momentum the industry has been waiting for. The National Association of Realtors’ chief economist, Lawrence Yun, believes sales could jump by about 14 percent nationwide, breaking free from the stagnation that defined 2025.
What makes this projection striking is that it isn’t based on wishful thinking. There are early signs, small but consistent that buyers are beginning to re-enter the market. Mortgage applications have been climbing steadily for weeks. Job growth remains strong. Homebuilders are adding new supply instead of shutting down projects. And even the long government shutdown that threatened to delay transactions has finally ended.
Yun told attendees at NAR’s annual economic forum that these signals point toward a slowly strengthening market. Applications for home loans, for instance, were up 31 percent over last year. In an environment where confidence has felt thin, a jump that large suggests buyers haven’t given up on homeownership. They’ve simply been waiting for a nudge.
Mortgage rates continue to be the main drag. They opened the year at around 7 percent before drifting down to 6.24 percent this week. That’s still a far cry from the ultra-cheap rates of the pandemic era, but Yun expects a gradual improvement. He predicts an average rate of roughly 6 percent in 2026, which could be just enough to tip undecided buyers back into the market.
He also warned that no one should expect 3 percent rates again. Mortgage rates are tied to everything from inflation to Treasury yields, and the broader economic environment today simply doesn’t support those levels. Still, even a modest reduction tends to unlock demand because it improves monthly affordability.
If the broader national picture looks cautiously optimistic, the market underneath is fractured. Higher-priced homes are moving faster and more easily than lower-priced ones. Wealthy buyers, flush with cash and investment gains, are purchasing homes in the $750,000 to $1 million range with little hesitation. But the lower end is tight, with limited inventory and intense competition.
Jessica Lautz, NAR’s deputy chief economist, described the current divide as a market of “haves and have-nots.” First-time homebuyers, once the backbone of the market, have dwindled to just 21 percent of all purchases—a historic low. Traditionally, about 40 percent of buyers are entering the market for the first time. Many young adults still want to buy a home, Lautz said, but they are worn down by rent spikes, student loans and childcare costs.
The average first-time buyer today is 40 years old, far older than in past decades. Meanwhile, repeat buyers, especially older homeowners continue to dominate. Baby boomers, who own a significant share of the country’s housing wealth, often purchase their next property with cash or by tapping the large equity gains they’ve built over time.
As the holiday and winter slowdowns begin, sellers are being forced to adjust. Homes sitting on the market for too long are seeing price cuts. Yun shared data showing how these reductions grow with time: about 5 percent after two weeks, more than 13 percent after four months. These cuts aren’t a sign of collapse but the result of mismatched pricing and shifting buyer expectations.
Temporary dips may appear in certain markets where inventory rises too fast. But Yun believes national home prices will still climb about 4 percent in 2026, supported by steady job growth and a chronic shortage of entry-level homes. That follows an estimated 3 percent climb in 2025.
Concerns about foreclosures have also been swirling, but the fundamentals remain healthy. Delinquencies are low, most homeowners owe far less than their homes are worth, and the labor market continues to add jobs every month. These conditions make a crash unlikely.
So while 2025 was a year of waiting and watching, 2026 is shaping up to be the year the housing market begins to breathe again. It may not be a dramatic rebound, but the industry seems ready for movement after years of strain. Buyers, builders and sellers appear to be aligning at last, creating the conditions for a more active, more stable market in the year ahead.
