Normalization of the market, stabilized mortgage rates, and positive inventory growth highlight a market finding equilibrium after years of substantive headwinds and fluctuations
HomeServices newly released report outlines key factors impacting the residential real estate market, including inventory, mortgage rates, consumer sentiment, and more highlights that 2026 will be a year of increased stability in the housing market.
As we pass the midway point of the 2020’s, the residential real estate market has so far weathered a pandemic, substantive inflation, increasing mortgage rates, and inventory constraints from both lack of sellers and lack of new construction, as well as a residential real estate brokerage world in the midst of its own transitions.
That said, the report notes that buyers will have more choices compared to recent years, where lines at open houses and consistent multiple bids on listings were the norm. For sellers, the good news is substantive equity from years of steady price increases across almost every region in the country.
“We are on a path to stability in the national residential real estate market after quite a few years of turbulence of one type or another,” said Chris Kelly, President & CEO of HomeServices of America. “Our report’s intent is to touch on the key facets buyers and sellers will be evaluating before making decisions. It is practical, meaningful content.”
Key findings include:
- After surging from historic lows in 2020-2021, to decades-long highs in 2023-2024, consumers are accepting that the generationally low mortgage rates were an anomaly and rates will be hovering in the 6% rate for the foreseeable future.
- Scarcity has been the word for housing inventory due to a number of factors – decades of underbuilding (estimates on the national housing deficit are in the 4.5 million homes range, with only 2 percent of homes in the U.S. built after 2020), rapid household formation, and extremely low homeowner mobility, in particular over the past five years. In 2026, HomeServices expects measurable progress with steady new construction and a consistent flow of new listings.
- Home pricing will be returning to moderation after double-digit appreciation from 2020-2022, and sharp deceleration from 2023-2024. HomeServices expects that 2026 will likely be more predictable, similar to the pre-Covid real estate market, with home prices continuing to rise, but at a pace more aligned with historical averages, which are 2.5 to 3.5 percent.
- Affordability will continue to be a challenge in 2026, with wage growth cooling, while mortgage rates remain stable. Entry-level buyers will continue to face a shortage of options under the median price point, with major urban areas in particular experiencing substantive shortages of entry-level single-family homes.
- Total home sales in 2026 will be reflective of a market in recovery. With mortgage rates easing and inventory improving, buyers are saying that they are ready to re-engage.
- The issue of consumer perception vs actual market conditions will continue to impact the residential real estate market. Many homeowners still anchor their expectations on what a neighbor, friend, or relative’s home sold for in 2022 or 2023. Those prices were not sustainable, making the need for a real estate professional to guide pricing through factual metrics all the more compelling.
- There are clear regional variations in the housing market. The west and mountain states will continue to see lower appreciation; the south will continue to experience strong population inflows, which will facilitate moderate price growth; the tight supply in the northeast will support price increases; with the Midwest remaining the nation’s affordability anchor.
Explore a deep dive into 2026 housing dynamics, including consumer behavior, market drivers, and the trends impacting mortgage rates, inventory, pricing, and home sales—all in one comprehensive report.
View and download a complete copy of the report here:
