Key takeaways

• The housing market is showing gradual improvement despite a weaker-than-expected first half of 2026.
• Economists and experts say there are signs that homebuyers and sellers are adjusting to current market conditions.
• The market has shown surprising strength this summer, given broader economic and geopolitical influences, according to Brad Case, chief residential economist for Homes.com.

A little more than halfway through 2026, the housing market has yet to accomplish many of the lofty goals it was expected to achieve this year. Even so, emerging bright spots are providing hope for a stronger end to the year.

"The housing market is gradually improving," according to Nadia Evangelou, principal economist and director of real estate research for the National Association of Realtors.

"Momentum is building, even if it's just small increases," she told Homes.com News in an interview.

A snapshot of today's market shows expanding inventory, resilient prices and signs that borrowers could be growing comfortable with elevated mortgage rates. At the same time, home sales, though still below pre-pandemic levels, are up from last summer.

That said, it's not that today's housing market is booming, according to Brad Case, chief residential economist for Homes.com. "It's just that it's been surprisingly strong."

Of course, if there's anything to take away from the last few years in the housing market, it's that things can change in an instant, and when one piece of the puzzle fits, it doesn't mean they all do. For now, though, there's a sense of optimism and clarity in the market that hasn't been seen in some time.

"It comes back to the fact that fundamentally, people don't buy and sell houses because of market conditions," Case explained in an interview with Homes.com News. "They buy and sell houses because of their lives. Because they do really want to move, and they do really want to buy."

Here's a breakdown of where the housing market stands today — and where it could go through the end of 2026.

The mortgage market is a sort of mixed picture. On the one hand, average borrowing costs are still lower than they were this time in 2025. In fact, this summer has seen the lowest weekly averages since 2023.

Zoom in, though, and it's more complicated. The 30-year, fixed-rate mortgage has climbed more than 40 basis points since the start of 2026, and there's little relief in sight amid the ongoing conflict in the Middle East.

"We don't see a huge difference from now to the end of the year," Destinee Stice, vice president of loan origination at New Day USA, told Homes.com News in an interview. "Rates are pretty set where they are. I think the 6s are probably where we're staying."

There is, however, some evidence that, looking ahead, mortgage rates could pose less of a barrier to the market. Case, the residential economist at Homes.com, noted that even as mortgage rates and home prices have stayed high, sales have picked up.

"Buyers have become comfortable buying at a 6.5% mortgage rate," he explained. "And sellers have become comfortable selling at a 6.5% mortgage rate because they're comfortable becoming buyers at a 6.5% mortgage rate."

Part of that comfort has stemmed from an increase in inventory, with an asterisk of sorts.

Big picture: inventory is still significantly lower than pre-pandemic levels, but it's moving in the right direction, according to Evangelou from the Realtors association.

"We still need about 350,000 listings to be back to pre-pandemic levels," she said. "But when we compare to the record lows of 2022 or 2023, we have about 40% more inventory than back then."

Indeed, data from Homes.com found that in June, there were more than 1.41 million active listings, a 4.2% increase from the same time a year earlier.

The buildup in inventory started earlier this year, before the conflict in Iran began, and when mortgage rates were trending lower. It's a trend that's continued despite those headwinds as homebuyers and sellers have to contend with changing life circumstances, according to Case.

"It's just time," he explained. "You can deter life for a certain amount of time, and then you have to stop."

With more properties coming to market, some buyers have found more opportunities to get into the housing market. While that's showing up across the country, it's not a universal experience.

"In the big cities, you have supply constraints, and that makes everything more favorable for sellers," Case added. "Outside of the big cities, you don't have the same supply constraints. And so buyers are already better in better shape."

Another surprising bright spot in the market: Home prices are holding up even as inventory increases.

"When you see such a big increase in inventory, it's easy to think that you'll see a decline in the sale price to list price ratio," Case said, "but we saw the opposite."

In other words, though price appreciation is slowing from the highs of a few years ago, homes are still selling for full or near-full price.

Homes.com data from June showed that the national median home sales price rose 1.5% annually in June to $401,000; that's a far cry from the more than 20% gains seen in the summer of 2021.

At the same time, there are encouraging signs that affordability is improving for entry-level buyers. While prices in higher-end, move-up neighborhoods have risen, prices at the bottom of the market have actually weakened.

"It tells us that people who can afford to move out of the entry neighborhoods into the higher-priced neighborhoods, they're doing it," Case explained. "It's really, really, really benefiting those families that are looking for the entry-level home."

Data from the Realtors' association showed a similar improvement in affordability over the last 12 months, Evangelou said, but it remains below pre-pandemic levels.

Taken together, those conditions have also fueled stronger home sales, according to economists and data from Homes.com.

The U.S. saw 365,393 sales in June, a 6.1% year-over-year increase, with 20,871 more closings than in June 2025, Homes.com reported.

There are still some holdouts, though. The new construction market, for one, is in a more precarious position — a result of economic conditions and dampened buyer demand.

In June, single-family housing starts were down 3.25% compared to the same time in 2025, according to data released earlier this month by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. At the same time, the National Association of Home Builders/Wells Fargo Housing Market Index marked its 27th consecutive month of negative builder sentiment in July.

The hold up?

"Macroeconomic conditions," according to Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the home builders' association.

"The situation isn't going to change much because it seems that the U.S.-Iran conflict is going to drag on for a little longer and inflation will stay higher for longer because of energy costs," she told Homes.com News in an interview. "The Federal Reserve is going to stay on pause longer than we forecast."

It's created a one-two punch for the new construction market: Not only is it more expensive to build homes now, but builders have had to offer incentives and price cuts to attract buyers who are also facing obstacles, given the current macroeconomic conditions.

"It's going to be challenging, pretty tough, for the next 12 to 18 months," Nanayakkara-Skillington added. "2028 is when we start to see some optimism."

Original Article by: Moira Ritter, Homes.com