Home Sales Expected to Rise 14% in 2026 as Mortgage Rates Fall

After a sluggish 2025 marked by high prices, low inventory, and reluctant sellers clinging to ultra-low mortgage rates, the housing market may finally be headed for a reboot. The National Association of Realtors (NAR) is predicting a 14% jump in home sales next year — a reversal driven largely by easing mortgage rates and rising consumer confidence.

Pent-Up Demand Begins To Unwind

For many would-be buyers, the past few years have meant waiting on the sidelines. Bright MLS chief economist Lisa Sturtevant says that wait may finally be coming to an end. With more mortgage applications rolling in compared to last year, she believes the market is simply “reverting back to the mean” after an extended slowdown.

Economists say falling interest rates could be the catalyst. The 30-year fixed mortgage rate — hovering around 6.25% — is expected to drop below 6% in 2026. That psychological threshold, according to Sage Policy Group CEO Anirban Basu, could unleash a wave of buyers who’ve been hesitant to make a move. Even manufacturers in the homebuilding supply chain report optimism that a sub-6% rate could “take the lid off the market.”

Where the Growth Will Be — And Who Will Benefit

Cities across the South and Southwest, including Miami, Houston, and Phoenix, have seen major construction booms and are positioned to grow as more people move in. In some of these markets, prices are already softening because supply is catching up to demand.

But affordability remains a stubborn challenge. NAR chief economist Lawrence Yun points to retiring baby boomers — many with substantial equity — as a group likely to drive buying activity. Many are relocating not just for sunshine but to be closer to grandchildren, a trend he calls “the grandbaby effect.”

For first-time buyers, though, relief may be limited. With prices still steep, real estate agent Michael Orbino expects the sales surge to be led by high-end buyers, while renters may opt to stay put for another year as rental prices inch downward.