2026 Market Outlook: A New Era of Affordability and Mobility

Live Talks

Feb 20

Mike Simonson

The housing market is entering a transformative phase. After four years defined by low sales, relentlessly rising prices, and frozen mobility, 2026 marks the beginning of a new era. Compass Chief Economist Mike Simonson recently sat down to break down the latest data, offering a roadmap for what buyers, sellers, and agents can expect in the coming months.

The Big Theme: Improving Affordability

For the first time in years, the narrative around the housing market is shifting toward improving affordability. While headlines may highlight that home prices are soft or even declining in some regions, this is actually a positive signal for the broader economy.

Incomes vs. Prices: Incomes are currently rising faster than home prices, helping to repair the price-to-income ratio that has stretched thin over the last decade.
The Mortgage "Magic Number": Mortgage rates are currently hovering in the low 6.0s. Simonson identifies 6% as the magic number that triggers a notable uptick in transactions and buyer demand.
Cheaper Payments: Due to the dip in rates, the average monthly payment on a median-priced home is now 8% cheaper than it was one year ago.

A Divided "K-Shaped" Market

The 2026 market is not a monolith; it is defined by a sharp geographical and economic divide, often referred to as a "K-shaped" economy.

The North-South Divide: There is a stark contrast in market speed. The Midwest and Northeast remain the "hottest" markets with the shortest days on market due to tight inventory. Conversely, the Sunbelt has seen a surge in inventory, leading to longer market times and softer prices.
"Job Hugging" and Mobility: While unemployment remains low, the hiring rate is also low—comparable to recessionary levels. This has led to "job hugging," where homeowners stay put because they fear they won't find a new role if they move, keeping mobility locked in place.
Inventory Stability: Nationally, there are roughly 690,000 single-family homes for sale. While this is an 8.2% increase over last year, the growth rate of inventory is actually shrinking, particularly in states like Florida where inventory has recently peaked and begun to trail lower.

What This Means for You

For Sellers: Pricing Strategy Over Timing

The era of "pandemic craziness" is over. Sellers cannot simply name their price and wait for a bidding war.

Be Proactive: Many sellers who failed to price correctly last fall are now relisting their homes with average price reductions of about 3%.
Use Data: Tools like the Compass Buyer Demand tool allow agents to show sellers exactly how many active buyers are shopping in their specific price range.

For Buyers: The Driver's Seat

In most of the country, buyers have more leverage than they have had in years.

Don't Wait for a "Crash": There is no data indicating a flood of inventory or a rapid drop in prices.
Affordability Window: If you find a home you like and can afford, the current environment of lower rates and rising incomes offers a rare window of opportunity.

Deep Dive: Access the Full Analysis

As we navigate 2026, the housing market is finally moving away from the "frozen" state of previous years. While the "K-shaped" economy creates different experiences depending on your region, the overall trend toward improved affordability and unlocked mobility is a welcome change. Whether you are looking to buy or sell, the key to success this year lies in understanding local data and focusing on a sound pricing strategy rather than waiting for market timing that may never come.

This analysis is based on the comprehensive 2026 Market Outlook webinar. For a deeper dive into the data, including specific charts on regional trends, relisting statistics, and the full Q&A session, you can check the webinar recording.

Want to hear more? Let's connect and explore the best strategies for your real estate goals.