Housing market trends point to stronger home sales in 2026%

7 key factors

1. Buyers are tired of waiting: Americans have been postponing their moves for almost four years. Some of that latent demand is now being activated. In Sun Belt markets like Austin or Naples, buyers suddenly have ample inventories, less competition, softer prices and incomes that have risen significantly since 2022. Add in the best mortgage rates in two years, and you might end up with motivated buyers sitting on the sidelines.

2. Sun Belt Stock = Room for Sales Growth: Austin, Phoenix, Denver and much of Florida have enough supply to support a real increase in transactions. Prices may still be low, but that is exactly why bargain hunting is taking place. In the Goldilocks scenario, inventory is not a constraint; it turns out to be an opportunity.

3. The Northeast and Midwest need more mentions. Markets such as Chicago, New Jersey, Boston and much of the Midwest and Northeast remain supply-constrained, with 50-60% fewer homes on the market than in 2019. A Goldilocks scenario calls for a surge in new homes next spring. If supply does not increase here, sales growth will remain limited.

4. Improving hiring, even as unemployment rises. September’s labor market data showed an optimistic combination (for housing construction): simultaneously higher employment and higher unemployment. That is not as contradictory as it seems. More and more Americans, especially those over 55, are re-entering the labor market. Rising unemployment due to the expansion of the labor force should have an impact pull the interest rate down while healthy hiring keeps buyers confident. An overly robust labor market drives rates up. A labor market that is too weak contributes to housing supply, but not to demand. If job trends hold just right, this could be an ideal macro mix for 2026.

5. The Great Withdrawal Phenomenon = Shadow Question. In 2025, withdrawals spiked as frustrated sellers pulled offers that received no offers. Kompas has over 350,000 more recordings then in 2024 (until November 15 so far). The take rate of frustrated sellers to new listings is sharply higher than in 2024.

At first glance, shots seem to imply shadows inventorysellers who want to sell but can’t. But upon closer inspection, many of these residents appear to be owners, not investors. This implies that the recordings may in fact be indicative of shadows ask. Any withdrawn advertisement applies to owner-occupiers two deferred transactions from 2025 to 2026: a sale and a purchase. This condition means that house sales grow, but the total stock does not. If rates remain near 6% through 2026, a significant portion of these slowed moves could finally occur.

6. Buying psychology is important. After three years of price stagnation or declines in places like Denver, Austin and Tampa, prices will remain low or flat going into 2026. Combine cheaper money with cheaper houses, and you become attractive to buyers who have been waiting for years for this very setup. Too much demand drives prices up. Too cold and a deflationary mentality freeze activity. With Just-right, early bargain hunters can take action.

7. The weather is a swing factor. Florida alone could add 100 basis points to national revenue growth. After three major hurricanes suppressed activity in 2024, there was no activity in 2025. The momentum is already strong there; pending sales are up about 10% from last year, in part because the state has had no hurricanes in 2025.

The Goldilocks setup

Here’s the distilled version of what needs to happen for a bigger sales year in 2026:

1. Mortgage rates remain closer to 6% than 7%. Buyer activity is reliably strong at 6.25% and picking up sharply around 6.1%.
2. Most admissions in 2025 were owner-occupiers. When these culminate in completed sales and purchase transactions, they add hundreds of thousands of sales.
3. Soft prices lead to bargain hunting in the Sun Belt’s major metro areas.
4. Hiring is improving even as unemployment rises. That combination keeps buyers confident and rates low.
5. A cooperative hurricane season.

The Goldilocks case is not guaranteed. If inflation or hiring increases, mortgage rates could easily drop to 7%. A wave of economic turmoil, job losses or deflationary price psychology would freeze buyers again. The bond market currently shows only a 36% chance of a Fed rate cut in December, which is yet another reminder that this market can still move in the wrong direction.

But as of today, with mortgage rates at 6.3% and consistently better weekly contract volume than last year, the ingredients for a stronger 2026 are in place. We’ll see if they mix well.