Housing market outlook for 2026—and 10 cities where prices may fall
The housing market has been plagued by high prices and slow sales for the past few years. But in 2026, Redfin’s “reset” year.
This reset is due to an increased supply of homes after years of limited inventory, which could cause prices to fall next year in some markets.
Overall, home prices have mostly stabilized over the past two years as new construction has increased. There are already signs that the market is loosening: Homes are sitting on the market longer, bargains are becoming more common, and builders are offering discounts in markets where the supply of newly built homes is increasing. According to realtor.com.
This doesn’t mean homes will suddenly become affordable nationwide. Median home prices are still too high for many buyers after rising 25 percent since 2020. US Census data. Thirty-year fixed mortgage rates are also expected to remain above 6% through 2026, limiting the relief buyers will see.
But in some markets builders are increasingly using price cuts and incentives While overall affordability remains tight, it’s giving buyers more leverage by moving inventory.
“The bottom line is that 2026 will be a transition year,” Chris Reis said. broker He talks Make It to CNBC with Compass in Seattle. “There will be no crash or boom, just the market rebounding after years of extraordinary disruption. Buyers will have more choice and bargaining power than at any time since the pandemic.”
What to expect in 2026?
Most housing forecasts point to a market that looks stable rather than dramatic: Home prices are expected to rise slowly and mortgage interest rates may fall modestly, but borrowing costs will still make buying expensive for many households.
Here’s how several notable forecasters expect U.S. home prices to change in 2026:
Meanwhile, interest rates on 30-year fixed mortgages are expected to remain above 6% in 2026, as they have for the past three years. The current average rate is approximately 6.2%. According to Mortgage News Daily. Here’s where leading forecasters expect rates to rise next year.
While there isn’t much cost relief in home prices or mortgage rates, buyers are seeing more bargaining room when housing supply increases, especially with new construction.
That’s because builders who live in recently completed homes are more willing to make deals, says Joel Berner, senior economist at Realtor.com.
“Fast-carrying inventory is readily available and builders are lowering prices and offering incentives to sell,” he wrote in one post. last blog post. This flexibility is less common in the current housing market, where many homeowners are locked into lower mortgage rates and have little incentive to sell.
Where prices may fall in 2026
Home price trends in 2026 are expected to vary widely by metro area.
While prices continue to rise modestly in many parts of the country, prices are expected to be flat or declining in some major housing markets, especially parts of the West and South, according to Realtor.com. In these areas, buyers may find more room to negotiate.
Based on realtor.com 2026 forecastHere are 10 of the 100 largest U.S. metros expected to see the biggest year-over-year declines in home prices next year:
- Cape Coral – Fort Myers, Florida: −10.2%
- North Port – Sarasota – Bradenton, Florida: −8.9%
- Stockton-Lodi, California: −4.1%
- Raleigh, North Carolina: −3.7%
- Deltona – Daytona Beach – Ormond Beach, Florida: −3.6%
- Tampa-St. Petersburg–Clearwater, Florida: −3.6%
- Spokane – Spokane Valley, Washington: −3.5%
- Denver – Aurora – Lakewood, Colorado: −3.4%
- Sacramento–Roseville–Arden-Arcade, California: −3.3%
- San Francisco – Oakland – Hayward, California: −2.5%
Realtor.com’s forecasts estimate 2026 home price changes by taking into account inventory, mortgage rate expectations and local economic conditions.
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