Will Home Prices Rise or Fall in 2026?

As 2026 approaches, one question continues to dominate real estate discussions: Will home prices rise or fall? After several years of volatility caused by fluctuating mortgage rates, limited housing supply, and the economic effects of the pandemic, the housing market is again at a turning point. While many hope for a drop in prices, experts predict that the coming year will bring gradual stabilization rather than sharp declines or sudden spikes.

Market trends and data shows that the market in 2026 will be divided,” according to  Chase Baxter, Realtor and Investor, and Owner of Spokane Cash Home Buyers. “Buyers want prices to drop, sellers want them to rise, but nationally we are seeing stabilization, not extremes.”

Baxter explains that housing inventory is slowly improving, helping to flatten prices across many regions. He believes that if the Federal Reserve guides mortgage rates toward 6.25 percent, “we will likely see slower recovery in sales but steady momentum building into 2026.” The next year is expected to bring gradual appreciation in well-balanced markets rather than sudden changes.

Nationally, affordability will continue to be a challenge, but the rate of home price inflation should keep cooling. Dr. Helen Morris, Chief Economist at Revestor Insights, predicts modest growth rather than a downturn. “We are entering a cooling phase, not a crash,” she said. “Expect home prices to rise about 1.5 to 2 percent in 2026, which brings us back to normal historical levels.”

Morris emphasizes that income growth will be just as important as mortgage rates in determining affordability. “If wages do not rise with prices, affordability does not really improve,” she explained. The regions most likely to remain steady include the Midwest and Sunbelt, while expensive coastal areas may flatten or see slight declines.

For real estate investors, 2026 will be a year for focusing on stability and cash flow rather than speculation. Ben Mizes, CEO of Clever Offers, said, “I anticipate that home prices in 2026 will stabilize if they do not crash or surge. Buyers and investors should focus on cash flow instead of appreciation, as rates and rental yields will determine real security in this market.”

Mizes noted that the Midwest markets, especially Cleveland, Kansas City, and St. Louis, will likely outperform given that prices remain tied to local income levels. He added that if mortgage rates dip below 6 percent, more sellers could finally list, ending the gridlock caused by low-rate mortgages that have kept inventory tight.

While rates and data matter, buyer psychology also plays a key role. Patricia Lee, Mortgage Strategist at BlueSky Lending Solutions, said that after two years of hesitation, “buyers are regaining confidence as rates begin to settle below 6.5 percent.”

Lee believes that as more buyers expect to refinance later, many will move forward with purchases rather than waiting. “People are realizing it is better to lock in a manageable monthly payment now and refinance later, instead of waiting for a perfect market that may never come,” she said. This renewed confidence could lead to stronger demand in 2026, especially during the spring and summer months.

Affordability has been one of the most difficult challenges since the housing boom of 2020. However, advances in construction and local policy may help ease the pressure. Samuel Ortiz, CEO of BuildSmart Housing Solutions, said, “We are seeing a wave of modular and prefab home production that could ease supply shortages over the next few years.”

Ortiz points to cities such as Boise, Columbus, and Huntsville as examples of how zoning reform and faster permitting can encourage new development. “Making it easier to build is the surest way to control prices long-term,” he said. “2026 could be the year when these local efforts start showing real results.”

Markets across the country are performing differently depending on location and property type. According to Raimonds Lauzums, Owner of Poggers, the Midwest remains one of the strongest regions. “The Grand Rapids housing market will stay resilient thanks to local investment and community upkeep,” he said.

However, Raimonds Lauzums warns that not all properties are holding up equally. “Homes with high HOA fees or costly maintenance needs are seeing price cuts and concessions,” he explained. He believes 2026 will favor homes with solid mechanical systems, affordable holding costs, and good walkability rather than those focused on trendy upgrades.

He added that changes in mortgage rates could strongly influence buyer behavior. “If rates drop into the low sixes, we will see first-time buyers return to the market, especially in affordable school districts.” Midwest cities like Grand Rapids and Kalamazoo suburbs are expected to perform well, while high-end condos and luxury homes could face slower sales.

According to Aaron Perez, Realtor, Real Estate Investor, and Owner of Sell Your San Antonio House, patience will be a buyer’s greatest advantage in 2026. “Patience is the edge now,” Perez said. “Buyers should negotiate longer settlements and secure rates before committing, while investors should focus on areas with strong employment and rental yields around 4 to 5 percent.”

Perez recommends that both buyers and investors remain disciplined and unemotional in their decisions. “The winners in 2026 will be those who buy for stability, not speculation,” he added. He also advises checking borrowing limits regularly and staying flexible as lending conditions evolve.

Taken together, the experts agree that 2026 will not bring dramatic change but rather a period of stability and correction. Housing markets that saw steep gains in 2020 to 2022 are returning to balance, while underbuilt regions will continue to experience slow upward pressure.

Baxter summed it up simply: “Underwrite the payment, not the headline rate. If the monthly payment fits, lock it in. Walkability, schools, and maintenance matter more than trendy features.”

Overall, the housing market in 2026 will likely return to the basics, where value depends more on affordability, quality, and location than speculation or hype.

For buyers, patience and preparation will be key. With modest price growth and slightly lower mortgage rates, 2026 could offer better opportunities than recent years, especially for those targeting smaller cities or well-maintained homes in good neighborhoods.

For sellers, realistic pricing will be essential. Homes that are updated and priced competitively will continue to sell, while overpriced listings could sit longer. As more inventory becomes available, the balance between buyers and sellers should continue to even out.

After several years of uncertainty, 2026 is shaping up to be a year of cautious growth rather than boom or bust. With mortgage rates expected to remain near 6 percent, improvements in construction, and steady buyer confidence, home prices are more likely to rise slowly or stay flat rather than drop sharply.

Experts predict that affordable midwestern markets and growing southern cities will continue to appreciate, while expensive coastal and luxury areas may level off or decline slightly.

In short, 2026 will likely be remembered as a year when the housing market found its balance again. For buyers, sellers, and investors alike, understanding fundamentals and staying realistic will be the best strategy for success.