We've reached the point at which real estate economists start rolling out their forecasts for the year ahead — but the unpredictability of the U.S. economy is making the task tough this time around.

A year ago, economists weren't too far off when it came to their predictions for 2025: 30-year mortgage rates did stay above 6%, as most expected, and home sales price growth did slow. Predictions about home sale growth varied, as many economists were overly optimistic.

Depending on how the final weeks of December pencil out, 2025 is shaping up to be either flat or slightly above 2024 in terms of home sales.

For 2026, the main theme from real estate economists' first batch of forecasts is that the housing market should continue to slowly improve for buyers and sellers — even with persistent economic uncertainty.

"Buyers are benefiting from more inventory and improved affordability, while sellers are seeing price stability and more consistent demand. Each group should have a bit more breathing room in 2026," said Mischa Fisher, chief economist at Zillow.

Here's a look at what economists from Zillow, Redfin, Realtor.com, Bright MLS and the National Association of Realtors are predicting for 2026, with a focus on three key statistics: sales, mortgage rates and prices. Several other real estate economists are expected to unveil their own forecasts for the year ahead in the next week.

No consensus on home sales

Economists are all over the place when it comes to home sales predictions.

One reason for the differing opinions? The U.S. economy appears to be at a fork in the road. If the job market continues to soften, will that lead to cooling inflation and more short-term interest rate cuts by the Federal Reserve? Or will tariffs, wage growth and other factors drive up prices and cause stagflation?

Existing home sales are expected to rise — but by how much depends on who you ask:

• Existing home sales will rise 3%, bringing the annualized sales rate to 4.2 million (Redfin).

• A 4.3% increase would bring the year's existing home sales total to 4.26 million (Zillow).

• A conservative 1.7% rise would put annual sales slightly lower at about 4.1 million (Realtor.com).

• Sales could jump by 9%, which would bring annual sales up to 4.5 million (Bright MLS).

• A more optimistic forecast anticipates that existing home sales could rise by 14% (NAR).

Pent-up demand and slightly improved affordability are the main reasons Bright MLS is expecting a 9% boost. The organization's report noted that, even if its prediction comes true, housing market activity would still fall short of pre-pandemic levels. 

"While lower mortgage rates and more inventory will bring some buyers back, this will be a reset year, not a rebound year," said Lisa Sturtevant, chief economist at Bright MLS. "Market performance will hinge on local economic conditions, making 2026 one of the most geographically divided markets we've seen in years."

Redfin is also characterizing 2026 as a reset year but anticipates a period of gradual home sales increases as affordability slowly improves.

Mortgage rates expected to steadily decline

How rates shift in 2026 will remain a big factor for home sales, according to Daryl Fairweather, chief economist at Redfin. She expects mortgage rates to drop slightly in 2026, which will translate to a small improvement in home sales.

Inflation will matter more to rates than leadership changes at the Fed and however many short-term interest rate cuts it makes next year.

"If a new Fed chair cuts rates now, but there's still inflation, market traders would assume that the Fed will have to increase rates later on to make up for that misstep," Fairweather told Real Estate News in a phone interview. "But if inflation is lower to justify a rate cut, that could move mortgage rates down and improve home sales."

Real estate economists generally agree that 30-year rates will drop slightly in 2026:

• Mortgage rates will fall to 6.15% by the end of 2026 (Bright MLS).

• The rate will average 6.3% for the year, down from a 2025 average of 6.6% (Redfin, Realtor.com).

• A more optimistic forecast pegs the 30-year fixed-rate mortgage average at around 6% (NAR).

• It's unlikely that rates will fall below 6% in 2026 (Zillow).

But there is a downside to declining mortgage rates. The anticipated drop would be due to a weaker job market, less spending and cooling inflation. Rising unemployment generally hurts home sales — but the way the government chooses to respond will also factor in.

"When there's a recession, that means the Fed has to cut — and you could see a much more dramatic decline in rates, which could result in a much more dramatic increase in home sales, even amidst a weaker economy," Fairweather said.

Home price growth to stay mostly flat

Most forecasters expect home prices to be muted in 2026:

• Persistently high mortgage rates and high home prices will prevent the median home sales price from rising more than 1% (Redfin).

• As the housing market moves toward a healthier state, prices will grow 1.2% (Zillow).

• Overall home appreciation will increase by 2.2%, though inflation may outpace this uptick (Realtor.com).

• The national median home price will rise to $417,560, a 0.9% increase (BrightMLS).

• Other economists believe home prices could climb by 4% in 2026 (NAR).

A second year of near-flat price growth will continue to ease affordability strains, particularly if wage growth rises at a faster rate. However, wage growth still has a long way to go to catch up to the spike in mortgage payments.

During a recent webinar, John Burns of John Burns Research and Consulting noted that mortgage payments jumped 82% in the past five years, while income rose only 26%.

"That is a huge problem," Burns said. The only way to close the gap is for there to be a huge increase in income, a big drop in home prices and in mortgage rates, or a combination of the three.

Original Article by: Dave Gallagher