The Goldilocks case for home sales in 2026

Home sales are finally showing real momentum as we close out 2025. The trends are consistent enough to inspire me to sketch a Goldilocks case that results in very significant home sales growth 2026. What if we get lucky and the conditions land just right?

First the data. The Altos weekly pending sales counts are running well ahead of last year. In mid-November, newly pending contracts were 15% higher than 2024, up from the 5-8% gains we’d been seeing earlier in the fall. With mortgage rates holding near 6.3% (70 bps below last year at this time) buyers seem to be responding.

After weak second-quarter home sales when rates hovered near 7%, full year 2025 sales have recovered: in our Compass data, we count cumulative closed transactions greater than 1% above 2024 through the third quarter, the latest period for which the Company has released sales data. The Altos weekly pending data is also 1% greater than last year, through mid-November.

NAR’s latest Existing Home Sales report confirms the trend, with sales ticking up to an annual rate of 4.1 million in October. These gains look durable, not like a one-off data blip. If rates stay in the low 6s, 2026 should open with solid tailwinds.

But the bigger question is whether we can get a meaningful increase, something closer to 10% in 2026 instead of the 1% we’ve managed to eke out for the calendar year 2025 so far. That possibility hinges on a few factors already taking shape in the data.

7 key factors

1. Buyers are tired of waiting: Americans have delayed moves for nearly four years. Some of that latent demand is now activating. In Sun Belt markets like Austin or Naples, buyers suddenly have ample inventory, less competition, softer prices and incomes that have risen meaningfully since 2022. Add the best mortgage rates in two years, and you may get motivated buyers stepping off the sidelines.

2. Sun Belt inventory = 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 soft, but that’s precisely why bargain hunting is underway. In the Goldilocks scenario, inventory isn’t a constraint, it proves to be an opportunity.

3. The Northeast and Midwest need more listings. 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 requires an uptick in new listings next spring. If supply doesn’t rise here, sales growth will continue to be capped.

4. Hiring improvement, even with rising unemployment. September’s labor market data showed an optimistic (for housing) combination: higher hiring and higher unemployment at the same time. That’s not as contradictory as it seems. More Americans, especially those over 55, are re-entering the labor force. Rising unemployment from labor-force expansion should have the impact to pull interest rates down while healthy hiring helps keep buyers confident. A too-robust job market pushes rates higher. A too-weak job market adds to housing supply but not demand. If job trends stay just-right this may be an ideal macro mix for 2026.

5. The great withdrawal phenomenon = shadow demand. In 2025, withdrawals ran extremely high as frustrated sellers pulled listings that didn’t get offers. Compass counts over 350,000 more withdrawals than in 2024 (year to date through November 15.) The withdrawal ratio of frustrated sellers vs new listings is sharply higher than in 2024.

At first glance, withdrawals seem to imply shadow inventory, sellers who want to sell but can’t. But upon closer inspection, many of these appear to be owner-occupants, not investors. This implies that the withdrawals may in fact be an indication of shadow demand. For owner-occupiers, every withdrawn listing is two delayed transactions from 2025 into 2026: a sale and a purchase. This condition implies that home sales grow but total inventory does not. If rates hold near 6% in 2026, a meaningful share of these delayed moves could finally transact.

6. Bargain psychology matters. After three years of price stagnation or declines in places like Denver, Austin, and Tampa, prices entering 2026 remain down or flat. Combine cheaper money with cheaper houses, and you become attractive to buyers who have been waiting years for precisely this setup. Too-hot demand pushes prices higher. Too cold and a deflationary mindset freezes activity. Just-right allows the early bargain hunters to act.

7. Weather is a swing factor. Florida alone can add 100 basis points to national sales growth. After three major hurricanes suppressed 2024 activity, 2025 saw none. Momentum there is already strong; pending sales are running roughly 10% higher than last year, partially 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 stay nearer 6% than 7%. Buyer activity is reliably strong at 6.25% and turns on sharply near 6.1%.
2. Most 2025 withdrawals were owner-occupants. If these turn into completed sell-and-buy transactions, they add hundreds of thousands of sales.
3. Soft prices spark bargain hunting in key Sun Belt metros.
4. Hiring improves even if 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 heats up, mortgage rates could easily push back toward 7%. A surge in economic anxiety, job losses or deflationary price psychology would freeze buyers again. The bond market currently gives only 36% odds of a Fed cut in December, another reminder that this market can still break the wrong way.

But as of today, with mortgage rates at 6.3% and weekly contract volumes consistently beating last year, the ingredients for a stronger 2026 are in the bowl. We’ll see if they mix just right.