WASHINGTON — December 10, 2025 — After three consecutive years of suppressed home-sale activity, leading real estate economists are signaling the first measurable signs of recovery ahead. At the National Association of Realtors’ annual Real Estate Forecast Summit, held virtually on December 9, chief economists from NAR, Realtor.com, and the National Association of Home Builders presented a cautiously optimistic outlook for the 2026 U.S. housing market.
A Market Emerging From a Three-Year Slowdown
NAR Chief Economist Lawrence Yun opened the summit with a sharp assessment of the current cycle:
• Existing-home sales are down 0.1% year-over-year as of November 2025
• New-home sales are down 1.2% year-over-year
• Overall home-sale activity remains at 75% of pre-pandemic levels
Despite the slowdown, prices have continued climbing. Between Q1 2020 and Q2 2025, New York State home prices surged 59.4%, one of the steepest increases in the country.
Looking ahead, Yun projects flat existing-home sales for 2025, followed by meaningful growth in 2026 as supply improves.
“After three years of flat home sales, a solid double-digit percentage increase is expected in 2026,” Yun said. He expects elevated inventory, improved affordability, and a more accommodative Federal Reserve to help “more Americans buy their next home.”
Mortgage Rates: Relief, But Not a Reversal
Economists anticipate modest rate improvements, but no dramatic drop.
• MBA reported a 6.33% average 30-year rate as of December 5.
• NAR forecasts rates to end 2026 at 6.0%.
• The Federal Reserve is expected to issue three rate cuts between late 2025 and 2026.
Rate cuts, however, will have limited downward impact on mortgage pricing, economists agreed.
Price Growth and Jobs Expected to Strengthen
Despite affordability challenges, Yun expects:
• Home prices to rise 4% in 2026, up from a 3% increase in 2025
• Job gains to exceed 1.3 million, more than triple the increase expected for 2025
• Unemployment to tick up slightly to 4.5%
Consumer sentiment remains a risk factor, along with macroeconomic uncertainty and the pending U.S. Supreme Court ruling on tariffs imposed during the Trump administration.
A Shift Toward a Buyer-Friendly Market
Realtor.com Chief Economist Danielle Hale said the market is gradually rebalancing.
“We expect a more balanced housing market in 2026, leaning slightly in buyers’ favor,” Hale said, citing modestly lower mortgage rates and slower price growth that allow incomes to better catch up.
Homebuilding: Slow but Positive Momentum
Robert Dietz, Chief Economist for the National Association of Home Builders, shared a cautiously optimistic view:
• Single-family starts projected to rise 1% in 2026
• Multifamily starts expected to be flat
• Remodeling activity forecast to grow 4%
Dietz noted that easing affordability pressures and improving confidence should bolster the supply side of the market.
2026 Hot Markets: Where Demand Is Heading
Both NAR and Realtor.com released their lists of markets expected to outperform in 2026.
NAR Top Housing Hot Spots (Alphabetical)
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Charleston, SC
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Charlotte, NC-SC
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Columbus, OH
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Indianapolis, IN
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Jacksonville, FL
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Minneapolis–St. Paul, MN–WI
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Raleigh, NC
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Richmond, VA
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Salt Lake City, UT
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Spokane, WA
Realtor.com Top Markets
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Hartford-West Hartford-East Hartford, CT
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Rochester, NY
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Worcester, MA-CT
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Toledo, OH
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Providence-Warwick, RI-MA
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Richmond, VA
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Grand Rapids-Wyoming, MI
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Milwaukee-Waukesha-West Allis, WI
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New Haven-Milford, CT
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Pittsburgh, PA
Outlook: A Market Turning the Corner
The consensus across all economists: 2026 marks the beginning of a gradual but meaningful recovery.
Rising inventory, improving affordability, and a more balanced landscape are expected to bring buyers back into the market and stabilize pricing across much of the country.
After years of volatility — from pandemic whiplash to interest-rate shocks — the U.S. housing market may finally be approaching equilibrium.
