GLORIA SHEPARD TEAM | COMPASS

A Clear Perspective for the 2026 Housing Market

As the housing market enters a period of stabilization, informed strategy matters more than ever. Below, we outline the four key pillars shaping real estate in 2026—and what they mean for buyers, sellers, and homeowners planning their next move.

Four Important Real Estate Market Pillars to Track in 2026

The United States housing market is entering a pivotal era of stabilization. After years of pandemic-induced disruption—marked by frozen mobility and acute affordability crises—2026 represents a "Great Housing Reset." In this new phase, the market is shifting toward a healthier balance where income growth and inventory availability regain their roles as primary drivers.

1. The Affordability Reset: Flat Prices, Rising Incomes

Affordability is expected to improve not through a price crash, but through a gradual rebalancing. National home prices are forecasted to stay effectively flat at 0.5% growth. When contrasted against a 4% annual growth in household incomes, homes become "cheaper" relative to earnings for the first time in years. Mortgage rates are projected to stabilize in the low-to-mid 6% range, easing the typical monthly payment share of income below the critical 30% threshold by late 2026.

2. Unlocking Mobility: The End of "The Great Stay"

The "lock-in effect"—where homeowners refused to trade 3% mortgages for higher rates—is finally eroding. By 2026, nearly 20% of homeowners will carry mortgages above 6%, meaning millions of households are no longer financially tethered to their current homes. This shift is expected to drive transaction volume as delayed life moves resume.

3. Shadow Dynamics: Hidden Supply and Demand

The 2026 market contains a massive backlog of withdrawn sellers and motivated buyers. Nearly 60% of listings were pulled in late 2025 due to pricing gaps, while purchase mortgage applications rose 15–25% year-over-year. Any meaningful rate improvement could unlock both simultaneously.

4. K-Shaped Prosperity: AI Wealth and Federal Risks

Market performance is diverging sharply. Luxury demand is being fueled by AI-sector wealth, driving significant growth in high-end sales, while federal workforce reductions are creating localized stress in markets like Washington D.C., where listings have surged and prices softened.

Strategic Takeaway

For buyers, 2026 offers improved selection and negotiating power. For sellers, success now requires pricing discipline and accurate valuation strategies to avoid prolonged market exposure.

Let’s Talk Strategy

Whether you're considering a move or simply want clarity around your options, a personalized consultation can help you plan confidently for 2026.