According to the Realtor.com economic research team’s 2026 housing projection, mortgage rates will remain around 6% on average next year, but affordability will somewhat improve as the average monthly payment drops below 30% of a household’s income for the first time since 2022.
According to the estimate, mortgage rates would average 6.3% throughout 2026, which is much higher than the 4% historical average from 2013 to 2019 but a little better than the 6.6% full-year average anticipated for 2025.
The estimate shows that after increasing by 2% in 2025, housing prices nationwide will continue to rise by 2.2% through the end of next year. However, wages and general inflation are likely to continue rising faster than rise in property prices, offering a minor boost to affordability.
“After a challenging period for buyers, sellers, and renters, 2026 should offer a welcome, if modest, step toward a healthier housing market,” says Realtor.com Chief Economist Danielle Hale. “Incomes climbing faster than inflation as mortgage rates steady at a lower level create space for affordability to improve.”
Home sales are still expected to be slow. According to the forecast, existing-home sales would modestly improve through the end of 2025, gaining 0.1% to 4.07 million, following a 30-year low in 2024.
As affordability improves, overall existing-home sales will increase by 1.7% to 4.13 million in the upcoming year. Even though that would be better than the previous three years, it is still far less than the average of 5.28 million every year from 2013 to 2019. While new house building expands by 3.1% and existing home inventory continues to grow by 8.9%, the estimate predicts a minor 1% decline in rentals for the upcoming year.
According to the estimate, homebuyers will profit from lower mortgage rates and a slight drop in real, or inflation-adjusted, housing prices. The economic research team at Realtor.com predicts that household income will increase by more than 3.6%, surpassing both property prices and general inflation, which they predict will soar back beyond 3%.
Additionally, it is anticipated that the average monthly payment to purchase the median-priced home sold will decrease by 1.3% annually due to the softening of mortgage rates, which will be the first annual decrease in average monthly payments since 2020.
The monthly payment to buy the typical home is forecast to decline to 29.3% of median income, its first year below the 30% affordability level since 2022 when mortgage rates rocketed higher.
“In aggregate, consumers look to be in good shape, but lower-income and younger individuals may be more vulnerable as the labor market cools,” the report states.
The supply of existing homes for sale is predicted to increase by 8.9% in 2026, a third year in a row, which will benefit homebuyers as well.
However, as the market approaches pre-pandemic levels, the rate of inventory growth has decreased. By the end of 2026, countrywide inventory levels are predicted to remain around 12% below pre-2020 averages, an improvement from a 19% deficit in 2025 and almost 30% in 2024.
New construction will also continue to play a significant role in giving more options to homebuyers, with single-family housing starts forecast to climb 3.1% from 2025 to 1 million.
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