Homebuying Outlook: Trends to Watch in 2026

The real estate market is showing signs of improvement, with mortgage rates trending downward and available inventory on the rise. As of late 2024, mortgage rates hit two-year lows, making homeownership more affordable for potential buyers. With the average mortgage rate decreasing by over half a percentage point, buyers can save hundreds of dollars on interest payments.

According to Kara Ng, a senior economist at Zillow, buyers and sellers have come to terms with the current mortgage rate levels and are moving forward with their plans. The increase in active inventory, up by about 30% year-over-year in May and June, provides more options for buyers.

Home prices are expected to experience modest growth, with a forecasted increase of less than 2% this year. This slow growth should allow incomes to grow faster than home values, making homeownership more accessible. Economists like Daryl Fairweather and Chen Zhao have dubbed this the year of The Great Housing Reset, anticipating a more balanced market.

While there are still concerns about affordability and economic uncertainty, the current trends suggest a more favorable market for homebuyers. With lower mortgage rates, more options, and stable prices, buyers may find it easier to purchase a home in 2026.