According to the chief economist of Compass, 2026 is shaping up to be the beginning of a new era for the housing market, as modest gains in sales, improved affordability, and rising inventory begin to replace the prolonged stagnation of recent years. While home prices are expected to remain largely flat and sales below pre-pandemic peaks, key market indicators suggest that buyers and sellers alike may finally encounter more balanced conditions—particularly if hiring and new listings continue to strengthen. This shift will not be uniform across all regions or price tiers, but it does signal a meaningful opportunity for strategic participation in the market.
What’s Really Happening in the National Market Heading Into 2026?
After several years of constrained housing activity — with sales suppressed by high mortgage rates and a lack of available inventory — economists now see early signs of a market turning from freeze to flow. Core trends include:
- Inventory Expansion: National inventory is expected to increase by roughly 10% in 2026 as more homes enter the market, including so-called “shadow inventory” from homeowners who delayed listing in earlier cycles.
- Flat to Modest Price Growth: Home prices are forecast to rise less than 1% or stay largely flat as rising supply relieves upward pricing pressure.
- Sales Activity Rising: Analysts project existing home sales around 4.25 million to 4.3 million — modestly higher than in 2025 but still below long-term historical averages.
- Affordability Dynamics: With incomes expected to grow faster than home prices in some regions, affordability could improve, inviting new buyers off the sidelines.
These shifts suggest the market is not exploding with growth, but entering a more sustainable, balanced phase where both buyers and sellers can find leverage.
How Will This New Era Feel for Buyers and Sellers in 2026?
For Buyers
Better choice & leverage — With more homes available and price growth muted, buyers may find greater selection and modest negotiating power. New listings and rising pending sales are early signals of momentum that generally precede stronger activity in spring.
For Sellers
Strategic positioning matters — Sellers who price competitively and time their listings for peak demand seasons could outperform market averages even in a slower growth environment. Inventory rising from homeowners with low mortgage rates may also broaden the range of options in the market.
Regional Differences Will Matter
- Sun Belt & Growth Regions: Rapid job — and population growth — continues to support activity in areas like Southeastern metros, even as affordability improves nationwide.
- High-Cost Coastal Markets: Markets like San Francisco and parts of the Northeast might see more balanced conditions with longer days on market and nuanced buyer demand as affordability dynamics shift.
What’s Driving These Shifts?
1. Shadow Inventory Is Becoming Visible
Delistings and home withdrawals through 2025 have created a latent pool of homes that could enter the market when conditions feel more favorable — giving buyers more options and easing supply constraints.
2. Hiring and Mobility Effects
Employment growth — or lack thereof — directly affects mobility and home buying. As companies navigate cautious hiring, potential moves may pick up when job confidence strengthens.
3. Mortgage Rate Environment
Rates are expected to remain elevated compared to recent historic lows, but slightly lower than the peaks of late 2024 and early 2025. This stability helps buyers plan financing with greater certainty.
U.S. Market Data Snapshot: 2026 Outlook
Looking ahead to 2026, national housing forecasts point to a market that is stabilizing rather than accelerating. Home price growth is expected to remain very modest — at less than 1% nationally, according to Compass and Real Estate News, signaling price resilience without the rapid appreciation seen in earlier cycles.
Existing home sales are projected to reach approximately 4.25 to 4.3 million transactions, based on data from Redfin and Compass, reflecting a gradual improvement from 2025 levels but still below long-term historical averages.
On the supply side, housing inventory is expected to increase by roughly 5% to 10%, as more homeowners re-enter the market and previously sidelined listings return. This trend, highlighted by Compass and HousingWire, is a key driver behind improving the balance between buyers and sellers.
As for financing, mortgage rates are forecast to average around 6.4% in 2026, according to Compass projections. While higher than the ultra-low rates of the past decade, this level represents greater stability and predictability for buyers planning long-term purchases.
As always, local market conditions can vary significantly from these national trends, making regional expertise essential when interpreting how this outlook applies on a neighborhood level.
What This Could Mean for the Bay Area
While this analysis focuses on U.S. national trends, the Bay Area housing market may reflect similar structural themes:
- Price Stability with Premium Tier Resilience: High-demand neighborhoods like Pacific Heights, Noe Valley, and Marina often show price resilience even when national trends moderate.
- Inventory Growth in Commuter Suburbs: Inner-ring suburbs around San Francisco may see active supply as remote work choices and lifestyle shifts continue to influence buyer preferences.
- Hiring & Tech Sector Impact: Bay Area mobility and housing demand remain closely tied to local tech hiring — a key variable in shaping 2026 conditions.
Exact Bay Area data (median price, DOM, list-to-sale ratios) is available via MLSListings and San Francisco Association of REALTORS® real-time reports.
FAQs
Q: Will prices drop in 2026?
A: Most forecasts expect flat to slight price increases rather than broad price declines in 2026.
Q: Is 2026 a buyer’s market?
A: Conditions are moving toward balance, offering buyers modest leverage without a dramatic buyer’s market swing.
Q: What’s “shadow inventory”?
A: Homes that were withdrawn or delisted during tight market conditions could re-enter listings when confidence improves.
Q: Should sellers list now or wait?
A: Strategic timing around spring and careful pricing will be key — waiting may result in more competition as inventory grows.
Q: How does employment affect housing?
A: Strong hiring drives mobility and moves; stagnant hiring can dampen transaction activity.
Thinking about buying or selling in the Bay Area in 2026? Let’s talk about how these national trends intersect with local market dynamics and craft a strategy tailored to your goals.
Source: realestatenews.com
