Bright MLS projects 2026 as reset year, not a rebound

Bright MLS expects the U.S. housing market to enter a transitional period in 2026, with slightly lower mortgage rates and rising inventory offering some relief to buyers but not enough to fuel a full recovery.

The nation’s largest multiple listing service (MLS) released its annual forecast Wednesday — describing a market shaped as much by regional differences and economic uncertainty as by national trends.

Average mortgage rates are projected to stay above 6% next year, slipping from roughly 6.25% in early 2026 to around 6.15% by the fourth quarter as economic conditions soften.

Existing-home sales are forecast to climb 9% to 4.51 million — still well below pre-pandemic activity but an increase from recent lows.

Inventory is projected to rise nearly 11% by year’s end, reaching about 1.426 million homes for sale and pushing national supply above 2019 levels.

The median home price is expected to hit roughly $417,560, a 0.9% increase.

Some parts of the country will see declining prices, particularly markets where supply has grown quickly, Bright MLS added.

“The 2026 housing market will be shaped by uncertainty — economic, demographic and regional,” said Lisa Sturtevant, chief economist at Bright MLS. “While lower mortgage rates and more inventory will bring some buyers back, this will be a reset year, not a rebound year.

“Market performance will hinge on local economic conditions, making 2026 one of the most geographically divided markets we’ve seen in years.”

Diverging local conditions

Bright MLS projects a wide range of experiences for households depending on where they live.

Price growth is expected to be stronger supply-challenged markets across the Midwest and Northwest.

The same is said for tech-heavy markets such as San Jose, Calif., and San Francisco, where renewed demand is helping firm prices.

Cooling conditions are expected in parts of Florida and Texas — where listings have surged — and in Seattle, Portland, Ore., and Denver, where demand has moderated since the pandemic.

National inventory is expected to return to pre-pandemic levels as new construction sits longer on the market and more homeowners list after delaying decisions during the period of higher interest rates.

Sturtevant noted that buyers will generally have more options, though a less competitive environment will not be universal because supply remains limited in many areas.

Lower mortgage rates and rising supply are expected to bring more first-time buyers and downsizing homeowners back into the market — particularly in the second half of 2026.

Affordability challenges will persist, but Bright MLS expects demand from households that have delayed buying to re-emerge.

Potential wildcards

The forecast notes several risks that could alter the outlook, including;

Mortgage rates: Rates are expected to drift down, but persistent inflation, geopolitical developments or larger federal deficits could push borrowing costs higher. A jump in rates could slow buyer traffic.

AI and tech-sector volatility: Investment tied to artificial intelligence could boost housing demand in some regions, while layoffs or stricter return-to-office policies could undermine it in others — including tech hubs and federal employment centers.

High-end buyers: Wealthier households were active in late 2025. If that continues, some markets could see price gains even as affordability remains strained for entry-level and middle-income buyers.

Policy changes: A potential shift toward privatizing Fannie Mae and Freddie Mac or other federal housing policy changes could affect mortgage access, especially for first-time and lower-income buyers. Any disruption to the government guarantee could also prompt higher rates or more cautious lending.