2026 Real Estate Outlook: What the Market Is Telling Us Now

After several years defined by extremes, rapid appreciation, frozen transaction volume, and an endless cycle of “wait and see” the housing market heading into 2026 feels notably different.

Less reactive. Less emotional. And, according to the most credible voices in housing, more grounded in fundamentals than it has been in some time.

This is not a return to the frenzy of the early 2020s. It’s something quieter, and arguably healthier, a market beginning to normalize.

After three years of stalled momentum, sales activity is expected to rise meaningfully in 2026. The degree of that rebound depends on who you ask, but the direction is no longer in question.

According to National Association of REALTORS, existing-home sales could surge by as much as 14 percent next year. NAR Chief Economist Lawrence Yun told attendees at NAR NXT that “next year is really the year that we will see a measurable increase in sales”. He added that “home prices nationwide are in no danger of declining” with an expected price increase of 4% in the coming year.

Other forecasters take a more restrained view. Realtor.com projects a 1.7 percent increase in existing-home sales, emphasizing that affordability pressures will continue to temper enthusiasm in many regions.

The difference between those forecasts isn’t contradiction. It reflects how uneven this recovery will be. Some segments and markets are already moving quickly. Others are still finding equilibrium. What matters is that the era of flatlining sales appears to be ending.

Mortgage rates remain the single most powerful force shaping buyer behavior, but the narrative around them has shifted.

According to Fannie Mae, the 30-year fixed mortgage rate is projected to end 2026 at approximately 5.9 percent. While Mike Fratantoni the Chief Economist of the Mortgage Bankers Association is slightly more conservative, forecasting rates between 6.0 and 6.5 percent through 2028.

That difference may seem small, but the psychological impact is significant. The MBA expects total mortgage originations to rise to $2.2 trillion in 2026, an 8 percent increase over 2025, a clear signal that buyers are no longer waiting for perfect conditions.

Rates don’t need to return to historic lows to restart activity. They need to stabilize. According to most economists, that threshold is now in view.

Home prices are still expected to rise in 2026, but modestly. Zillow forecasts appreciation of roughly 1.2 percent, while Realtor.com projects closer to 2.2 percent. At the same time, First American expects household incomes to grow about 2.8 percent.

That imbalance matters.

“Incomes climbing faster than inflation as mortgage rates steady create space for affordability to improve,” says Danielle Hale, Chief Economist at Realtor.com.

This is not a correction driven by falling prices. It’s a normalization driven by slower appreciation and higher earnings. For buyers, that translates into more breathing room and more thoughtful decision-making.

According to Realtor.com’s 2026 forecast, national housing inventory is expected to grow by 8.9 percent next year. While supply will still sit roughly 12 percent below pre-pandemic norms, that represents a dramatic improvement from the nearly 30 percent gap seen just two years ago.

For the first time since 2020, Realtor.com also expects the typical monthly mortgage payment to decline year over year, pushing housing costs below the critical 30 percent of income benchmark.

That shift is reshaping behavior on both sides of the transaction. Buyers are no longer forced into snap decisions. Sellers are being reminded that pricing and presentation matter again.

Nowhere is this recalibration more visible than in the luxury segment. According to NAR, sales in the $750,000 to $1 million-plus price range are currently the fastest-growing slice of the market, a sign that well-capitalized, intentional buyers are driving momentum.

In Charlottesville, Virginia, Inessa Telefus, Realtor at Nest Realty, sees this shift clearly.

“Luxury buyers today want a property that feels completely turnkey,” Telefus says. “Updated kitchens, spa-caliber bathrooms, cohesive finishes, and no renovation surprises… quiet surroundings are coming up in nearly every high-end search I’m doing right now. Many of these buyers are relocating or preparing for retirement, so privacy and tranquility rank almost as high as location.”

Even in homes exceeding 5,000 square feet, buyers are prioritizing layout, proportion, and setting over sheer size. Views, once considered a bonus, have become a deciding factor. At higher price points, luxury is defined by experience rather than excess.

In South Florida, durability has become a defining feature of value. Gerard Liguori, Owner and Broker at Premier Estate Properties, says stabilizing inflation and improved supply chains are allowing builders to plan more effectively, even as construction standards rise.

“Updated building codes and policies are strengthening long-term value by improving durability, safety, and insurability,” Liguori says. “Resilient design is now a major selling advantage, not just a requirement.”

Impact glass, elevated construction, and storm-ready features are no longer viewed as optional upgrades. Buyers see them as essential to protecting both lifestyle and investment.

In major cities, luxury is evolving in a different direction. According to Andrew Schwart, Senior Vice President of Residential Asset Management at Taconic Partners, successful luxury development increasingly depends on how well it reflects its surroundings.

“Luxury residential need to match the lifestyle needs of the particular neighborhood,” Schwart says. “In 2026, projects that thoughtfully combine residential and retail uses, along with distinctive hotel-style amenities, wellness design or flexible workspaces, will continue to drive that demand for these neighborhood focused developments.”

In markets like New York, this has translated into a growing preference for mixed-use developments that weave residential living into the fabric of the neighborhood itself. Access to dining, transit, cultural destinations, wellness amenities, and flexible workspaces is no longer a bonus but an expectation. These projects succeed not because they feel self-contained, but because they enhance everyday life within dense, walkable urban environments making the neighborhood as much a part of the luxury experience as the residence itself.

Taken together, the numbers and on-the-ground perspectives point to a market that is stabilizing, not stalling. Sales are rising, rates are settling, inventory is recovering, and affordability is improving at the margins.

This is not a year driven by urgency. It’s a year driven by intention.

Buyers are paying premiums when homes align with how they want to live. Sellers who understand their local market are still achieving strong outcomes. And luxury, whether urban or rural, coastal or mountain, is increasingly measured by livability, resilience, and long-term value rather than spectacle.

According to nearly every credible authority in housing, 2026 isn’t about chasing momentum. It’s about making confident, informed decisions in a market that finally feels grounded again.