Forecasting Real Estate Market Trends for 2026

The real estate market is always evolving, shaped by economic shifts, demographic changes, and policy updates.

As we look toward 2026, understanding the trends that will influence buying, selling, and investing decisions is crucial. This post draws on the latest data from Realtor.com, Zillow, the National Association of Realtors (NAR), and Realtrends to provide a clear forecast of the real estate market in 2026. Whether you are a homebuyer, seller, investor, or industry professional, these insights will help you prepare for what lies ahead.

Suburban neighborhood with modern homes

Housing Supply and Inventory Trends

One of the most significant factors shaping the 2026 market will be housing supply. Realtor.com and NAR data indicate that inventory shortages, which have plagued the market in recent years, will begin to ease but not disappear entirely. Builders are expected to increase new home construction, especially in suburban and exurban areas, responding to ongoing demand from millennials and Gen Z buyers entering the market.

• New construction growth: According to NAR, new single-family home starts are projected to rise by 8-10% annually through 2026, driven by lower material costs and improved labor availability.

• Inventory balance: Zillow forecasts that the months of supply will stabilize around 3.5 to 4 months nationally, a healthier balance compared to the tight 1-2 months seen in 2023.

• Regional differences: Supply will remain tight in high-demand urban centers like San Francisco and New York, while more affordable markets in the Midwest and Southeast will see improved availability.

  
  

This gradual increase in supply should help moderate price growth and provide more options for buyers, though affordability challenges will persist in many areas.

Home Price Projections

Price trends will reflect the interplay between supply and demand, interest rates, and economic conditions. Realtrends and Realtor.com data suggest that home prices will continue to rise but at a slower pace than the rapid increases seen in the early 2020s.

• Moderate price growth: Nationally, home prices are expected to increase by 3-5% annually through 2026, compared to double-digit growth in previous years.

• Influence of interest rates: Mortgage rates are projected to remain near historical averages, around 5-6%, which will temper buyer demand and price escalation.

• Price segmentation: Entry-level homes will see stronger price growth due to high demand and limited supply, while luxury home prices may experience slower increases or slight corrections in overheated markets.

  
  

For buyers, this means more predictable price trends and less risk of sudden spikes. Sellers should anticipate steady appreciation but may need to price competitively in certain markets.

Buyer Demographics and Preferences

The profile of homebuyers in 2026 will continue to evolve, influenced by generational shifts and lifestyle changes. Zillow and NAR research highlight several key trends:

• Millennials and Gen Z: These groups will dominate the market, making up over 60% of home purchases. Their preferences lean toward walkable neighborhoods, access to amenities, and energy-efficient homes.

• Remote work impact: The rise of remote and hybrid work models will sustain demand for homes with dedicated office spaces and larger living areas, often located outside traditional urban cores.

• Sustainability focus: Buyers increasingly prioritize green building features, solar panels, and smart home technology, reflecting growing environmental awareness.

  
  

Understanding these preferences can help sellers and developers tailor their offerings to meet buyer expectations.

Mortgage and Financing Outlook

Mortgage availability and terms will play a critical role in shaping market activity. Realtor.com and NAR data point to a stable but cautious lending environment:

• Mortgage rates: Expected to hover around 5-6%, influenced by Federal Reserve policies and inflation trends.

• Credit standards: Lenders will maintain moderate credit requirements, balancing risk management with efforts to support qualified buyers.

• Alternative financing: Growth in non-traditional mortgage products, such as shared equity and rent-to-own options, will provide additional pathways to homeownership.

  
  

Buyers should prepare for slightly higher borrowing costs than the historically low rates of the early 2020s but can expect reasonable access to financing if credit profiles are strong.

Rental Market and Investment Opportunities

The rental market will remain a vital part of the housing ecosystem in 2026. Realtrends and Zillow data reveal important trends for investors and renters:

• Rising rents: Rental prices are projected to increase by 4-6% annually, driven by continued demand from younger adults delaying home purchases and workforce mobility.

• Multifamily growth: Developers will focus on building more multifamily units, especially in urban and suburban areas with strong job growth.

• Investor activity: Real estate investors will target markets with solid rental yields and population growth, such as Austin, Raleigh, and Phoenix.

  
  

For investors, multifamily properties and single-family rentals in growing regions offer promising opportunities. Renters should expect steady rent increases but also more options in new developments.

Technology and Market Transparency

Technology will continue to reshape how buyers, sellers, and agents interact with the market. Realtor.com and Zillow lead in providing data-driven tools that improve transparency and decision-making:

• AI and data analytics: Enhanced property valuation models and market trend forecasts will help buyers and sellers make informed choices.

• Virtual tours and digital closings: These technologies will become standard, reducing friction and speeding up transactions.

• Blockchain and smart contracts: Emerging applications may increase security and efficiency in property transfers.

  
  

These advances will make the market more accessible and efficient, benefiting all participants.

Policy and Economic Factors

Government policies and economic conditions will influence the real estate market in 2026:

• Housing affordability initiatives: Federal and state programs aimed at increasing affordable housing supply and down payment assistance will support first-time buyers.

• Tax policy: Changes to property tax rules or mortgage interest deductions could affect buyer behavior and investment decisions.

• Economic growth: Moderate GDP growth and stable employment rates will underpin steady housing demand.

  
  

As always, your local market has more factors and influences that dictate the housing market. It's best to consult with your local market expert if you're considering making any real estate related moves!