Everyone who owns real estate, lives in real estate, finances real estate or sells real estate is buying crystal balls for Christmas; 2026 was expected to be a steadier housing market, but so far, there are no significant signs of stability.
Realtor.com recently researched and prepared a 2026 housing forecast. They concluded that mortgage rates will average 6.3%, easing affordability pressures slightly. Home prices will rise modestly by 2.2% and existing home sales should climb to about 1.7%. None of this is earthshaking, but it is a meaningful gain from this year. Nevertheless, home sales will remain well below normal as high prices and financing costs continue to hold back demand.
At the same time, for sale inventory will continue to recover, up nearly 9% year over year. For homebuyers and sellers, this represents a shift to a more balanced market, offering breathing room and negotiating power that favors buyers.
The mortgage rate lock, which is, in effect, caused by extremely low rates during the pandemic years, has left many homeowners with a strong reason to not move even if they have the need and desire to do so. Recent data showed that four out of every five homeowners with a mortgage has a rate below 6% and many are at 3% or slightly above.
Home prices are expected to continue to climb in 2026, however, inflation is expected to outpace these gains. Essentially, this means that home prices will decline slightly after inflation is adjusted. The good news is that after higher-than-expected mortgage rates in most of 2025, the rates are finally starting to relax, especially in the second half of the year. The expectation is for rates to drop into the low 6% range.
All home buyers will benefit from lower rates and more inventory. However, it’s the first-time buyers who will benefit the most by finding an opportunity to get into their first home. The real estate market is driven by these first-time buyers since they will likely be moving up to a larger and more expensive property in the years ahead, keeping the real estate train rolling.
Realtor.com also included local market predictions in metro areas around the country. North Port/Sarasota/Bradenton are the metro areas we are part of. The prediction for us, therefore, is 2026 sales growth year over year up 0.8%, and the 2026 price growth year over year down 8.9%. Tampa/St. Petersburg/Clearwater is the next closest metro area to us. The prediction for this area is 2026 sales growth year over year down 3.1% and the 2026 price growth year over year down 3.6%. If you’re interested, you can print out all of the metro areas from the Realtor.com website.
I heard about the Realtor.com report from a television interview with Bill Pulte, who is the director of the Federal Housing and Finance Agency (FHFA) for the country. He oversees Fannie Mae, Freddie Mac and the Federal Home Loan divisions. His take on this housing forecast was a lot rosier than mine was after reading it myself. I suppose that’s his job, but keep in mind that Bill Pulte owns Pulte Homes, a large nationwide developer of new homes – just saying.
Since real estate markets affect all aspects of the economy and personal lives, everyone is anxious about the new year. You can always depend on your crystal ball, but better get on Santa’s list before he runs out. It looks like there will be a rush on them before Christmas Eve.
