By Samantha Delouya, CNN
(CNN) — Next year may mark a turning point for the US housing market.
After several years in a deep freeze, with high borrowing costs and soaring prices locking many Americans out of homeownership, economists say conditions may begin to shift in 2026
But next year, many economists are optimistic about the housing market. Many anticipate that rising incomes will start to outpace home prices, making homes feel more affordable for many Americans.
Redfin has dubbed 2026 “The Great Housing Reset,” while Compass has described it as the start of a “new era.”
And after years of historically low sales volumes, even a small increase in activity would mark a turning point for the housing market. The shift would come as the Trump administration has signaled it intends to prioritize housing affordability in 2026, though details of those plans remain limited.
The last few years, the housing market has felt stuck, said Mike Simonsen, the cheif economist at Compass. Fewer homes changed hands, but home prices kept relentlessly climbing.
“In the next era, we’ll have sufficient inventory on the market across the country, allowing sales to increase,” he said, predicting that the number of home sales would finally tick higher in 2026.
That may happen for a number of reasons – but government reform probably isn’t one of them.
Will home prices fall?
Home prices have exploded since the pandemic, as demand for homes outstripped supply, pricing many Americans out. Between the start of 2020 and the third quarter of 2025, home prices climbed nearly 55% nationwide, according to a recent report from the National Association of Homebuilders.
Beyond the general lack of housing already, many sellers have been unwilling to give up the ultra-low mortgage rates they locked in years ago, held off on listing.
But as homeowners adjust to rates above 6%, more may decide it’s time to sell in 2026, adding inventory to the market and easing price pressure, said Simonsen.
This year, there were glimmers of affordability, with some states like Florida, Texas, and California seeing average home prices decline in 2025 from their peaks.
But don’t expect a sharp nationwide drop in home prices in 2026, Simonsen said. Prices are more likely to hover near current levels.
“We’re forecasting a half a percent increase in home prices next year, which is essentially flat,” he said.
Even so, many buyers may still feel priced out in 2026. The best way to make homes more affordable long term would be to build more homes, Simonsen noted.
But when it comes to homebuilding, Simonsen said “we are behind.”
What will happen to mortgage rates?
Mortgage rates have trended lower in the second half of this year. Last week, the average 30-year fixed-rate mortgage was 6.18%, significantly lower than at the start of 2025, when rates were approaching 7%.
Simonsen expects mortgage rates to stay above 6% next year, but that could change. A wea