After three years of sluggish performance, the housing market is showing signs of life. Multiple forecasts point to 2026 as a turning point, with home sales expected to increase as mortgage rates moderate and inventory levels improve. For buyers, sellers, and communities waiting for relief, this could mark the beginning of what experts are calling "The Great Housing Reset."
The National Association of Realtors projects a 14% increase in existing home sales for 2026. This represents the most optimistic forecast among major housing economists, driven by expectations that mortgage rates will average around 6% next year, down from the higher rates that have kept many buyers on the sidelines.
Other forecasts paint a more conservative picture but still point toward growth. Zillow expects a 4.3% increase in home sales, while Redfin predicts a 3% rise. Even the most modest projections represent forward movement after years of decline.
Lawrence Yun, NAR's chief economist, emphasized the significance of this shift: "Next year is really the year that we will see a measurable increase in sales. Home prices nationwide are in no danger of declining."
Several factors are converging to create better conditions for the housing market. First, mortgage spreads have normalized after being unusually elevated in recent years. This means rates have a better chance of staying lower for longer, even as the broader economy adjusts.
Second, housing inventory is growing. Active listings have increased in many markets, giving buyers more options and helping to moderate price growth. Markets showing the strongest inventory gains include Maryland (34% increase), North Carolina (34% increase), and Nevada (27% increase).
Third, wage growth is expected to outpace home price appreciation for the first time since the Great Recession. While this won't make housing instantly affordable, it represents a step toward balance after years of prices rising faster than incomes.
Despite these positive signs, significant challenges persist, particularly for first-time buyers. The share of first-time buyers has fallen to an all-time low of 21%, and the median first-time buyer age has climbed to 40.
Middle-income buyers face especially steep obstacles. According to NAR research, these buyers can now afford only 21% of listings nationwide, down from 50% before the pandemic. This dramatic shift highlights why increasing supply at attainable price points is so critical.
Home prices themselves are expected to continue rising in 2026, though at a slower pace. Forecasts range from 1% to 4% appreciation, depending on the source. This modest growth reflects a market where demand is improving but remains constrained by affordability limitations.
Recovery won't look the same everywhere. Markets where housing costs and local incomes are better aligned will likely see stronger rebounds. The Midwest is emerging as a bright spot, with cities like Columbus, Indianapolis, and Kansas City showing strength due to their relative affordability.
Meanwhile, some previously hot markets in Texas and Florida have cooled after years of rapid growth. Markets with more inventory than they had in 2019 are experiencing price moderation or even slight declines in some cases.
At The True Life Companies, we view these forecasts through the lens of our core mission: addressing America's housing supply shortage. The projected increases in home sales, while encouraging, underscore the urgent need for more attainable housing across the country.
The housing deficit remains a fundamental constraint on affordability. With nearly 20% of young adults living with their parents (historically closer to 10%), the shortage affects not just homebuyers but entire generations trying to establish independence.
The only sustainable solution is building more homes at price points that align with what buyers can actually afford. This requires continued focus on urban infill development, efficient site planning, and removing regulatory barriers that add unnecessary costs to housing production.
The housing market won't snap back to pre-pandemic conditions overnight. What we're seeing instead is the beginning of a multi-year adjustment period, a gradual reset that brings supply, demand, and prices into better alignment.
For communities across America, this reset represents an opportunity to prioritize policies that support housing development. For families waiting to buy their first home or upgrade to meet their needs, it offers a glimmer of hope after years of being priced out.
The road ahead requires continued commitment from everyone involved in creating housing solutions. As we move through 2026, the focus must remain on increasing supply, improving affordability, and ensuring the next generation has access to the American Dream of homeownership.
For informational purposes only. Not an offer to sell or a solicitation to buy securities.
