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American Real Estate Association co-founder Jason Haber analyzes the state of the housing market and assesses Redfin’s announcement of a “Great Housing Reset” coming in 2026 on “The Claman Countdown.”
The American real estate market is moving in the right direction, but potential buyers won’t get much relief in 2026, according to an industry expert.
Hannah Jones, senior economic research analyst at Realtor.com, predicts inventory will continue to rise and mortgage rates will fall slightly to around 6.3%. While this is not a significant decline, it is still down from the average of 6.6% in 2025, highlighting how the market is becoming “slightly more buyer-friendly.”
Jones quickly tempered expectations, saying the market is unlikely to “turn a big corner in 2026.”
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With mortgage rates dropping slightly, housing payments will decrease at the same time, but only by about 1.3 percent, according to Jones. This change may not be noticeable, but Jones said it’s still a step in the right direction.
With mortgage rates dropping slightly, housing payments will decline at the same time, according to a real estate expert. (Aaron Schwartz/Xinhua)
The U.S. real estate market is still struggling to rebalance after years of turbulence since the COVID-19 pandemic. During the pandemic, bidding wars have driven home prices to record highs. Meanwhile, the dramatic rise in mortgage rates that followed made monthly payments even more painful for homeowners. Many would-be buyers who had secured ultra-low rates before their sharp rise decided to stay put, hampering supply and keeping prices high even with weaker demand.
Today, even as borrowing rates fall and inventory improves in some areas, the cost of purchasing a home remains out of reach for many households.
The affordability crisis in the U.S. housing market is putting home buying out of reach for many Americans. (Nathan Howard/Bloomberg)
Many buyers don’t want to give up their discounted rates. The latest figures from Realtor.com show that 52.5% of real estate loans are still below 4%, 70% are below 5% and 80% are at 6%, Jones said.
Fortunately, even with slight changes in borrowing rates, Jones said the market will see more movement than in the past two years. However, the majority of these moves concern households who have to move out of necessity.
There won’t be a massive move, but in areas with more favorable house prices, such as the West and South, Jones predicts more households will take the plunge.
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House pricespredicts Jones, will be largely similar to 2025. Nationally, house prices are expected to increase by around 2% in 2026.
“But of course the situation is very, very different if you’re talking about the South and West versus the Northeast and Midwest,” Jones said.
Many buyers don’t want to give up their lower mortgage rates. (Marco Bello/Reuters)
For example, inventory is up to 50% higher than pre-pandemic levels in the South and West, leading to weak housing prices in many metro areas in these parts of the country. Jones expects downward pressure on prices in these regions to continue as “new construction continues to move through the pipeline.”
On the other hand, Jones predicts there will still be upward pressure on prices in the tight Midwest and Northeast markets, where inventory levels are between 30% and 50% below pre-pandemic levels.
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“The Midwest and Northeast just haven’t seen the same construction activity that the South and West have seen over the last five years. So that’s really limited their ability to recover and led to more people considering … moving to other areas just to find a home to buy,” Jones said.
This glut of new construction has contributed to the recovery of the South and West markets.
