Housing Outlook for 2026 Takes Shape
The latest shift in mortgage rates has brought some welcome relief to buyers across the country. After the Federal Reserve delivered back-to-back rate cuts in September and October, the average 30-year fixed mortgage rate moved into the low 6 percent range. That is a meaningful improvement from the 7 percent rates many buyers were struggling with earlier this year, and it has already begun to reignite interest in the housing market.
Most experts predict stable to modest price appreciation in 2026. Some expect national home values to rise in the range of half a percent to roughly 4 percent. Their thinking is that lower rates will bring more buyers back, but supply is also improving which will help balance the market. Others believe pent-up demand will absorb new inventory as it comes online, keeping prices supported even in slower regions.
There are several factors that could push prices higher next year. Mortgage rates drifting below 6 percent would increase buying power for nearly every household. A steady labor market would bring hesitant buyers back into the process. Rising construction costs could also lift new home prices which tends to support values for existing homes.
There are also conditions that could cause prices to soften. If mortgage rates climb again due to inflation or risk pressure, affordability would take another hit. A surge in supply from downsizing baby boomers could overwhelm demand in certain markets. A weaker economy or rising unemployment would reduce the number of qualified buyers and slow momentum.
A flat market is also a possibility if mortgage rates and inventory rise at a similar pace. In that scenario affordability improves while buyers gain more choice, creating a push-pull effect that leads to stable national averages even as regional markets move differently. Some Sun Belt metros are still adjusting from the rapid gains of 2021 and 2022, while many Northeastern and Midwestern markets remain steady due to tighter supply.
The bottom line is that most analysts expect modest growth rather than dramatic swings in 2026. Even so, that does not mean buyers should wait. Rates are already lower than they were earlier this year and there is no guarantee they will fall much further in the months ahead. In many cases a small price increase or renewed competition can wipe out the benefit of a minor rate drop.
For those of us here in the Portland metro and Southwest Washington, these national conversations mirror what we are seeing on the ground. Buyers are stepping back in as rates improve, sellers are warming up again and the market feels more balanced than it has in a long time.
If you are thinking about buying, selling or investing as we head into 2026, now is the time to talk! I can walk you through your options, review your financing opportunities and help you understand what these trends mean for your specific neighborhood.
