My 2025 Year-End Market Report & 2026 Forecast

My 2025 Year-End Market Report & 2026 Forecast

Happy Holidays! I hope you find this year-end data and information useful as you  review where the market has been and where it is headed. 

It has been a productive year, and I hope you take the next couple of weeks to relax and enjoy. I truly hope to speak with you in the new year. 

I wish you all the best for this holiday season!

Special Details: The Luxury Market

I have gathered some special details specifically for the luxury market, which continues to operate as its own world, separate from the broader real estate landscape.

• Rate Independence: Sales in the luxury sector are not expected to be affected by mortgage rates because cash remains the primary method of transaction.
• Cash is King: Currently, at least half of all luxury sales are cash transactions.
• New "Entry-Level": In major metropolitan areas, million-dollar homes are now considered entry-level territory.
• Growth Driver: The luxury sector is expected to buoy overall housing sales in 2026, repeating its performance from 2025.
• The "Great Wealth Transfer": Over the next decade, approximately $31 trillion will be transferred by 1.2 million wealthy individuals to Millennials and Gen X, which will play a pivotal role in this market.

Below is a summary of my top predictions and market data to help you prepare for 2026.

 Mortgage Rates

While we saw an average rate of 6.6% in 2025, forecasters expect the 30-year fixed mortgage rate to remain above 6% throughout 2026.

[Graph Idea: A line chart showing the 2025 average of 6.6% vs. various 2026 projections ranging from 6.0% to 6.5%]

2026 Rate Projections:

• Capital Economics: 6.5%
• MBA / Compass: 6.4%
• Realtor.com / Redfin: 6.3%
• NAR / Fannie Mae / Zillow: 6.0%

Home Prices

Home prices are expected to grow in 2026, though the rate of appreciation will likely be modest and highly dependent on local supply and demand.

• Growth Range: Most forecasters project a price increase between 0.5% and 2.0%.
• Highest Projections: CoreLogic, Cotality, and NAR are more optimistic, predicting 4.3% and 4.0% growth respectively.
• Lowest Projections: The MBA is the outlier, projecting a slight decrease of -0.3%.

Inventory and New Construction

The "rate-locked" phenomenon is expected to diminish, leading to a rise in available homes.

• Inventory Boost: Analysts like Compass and BrightMLS expect inventory to grow by 10% to 15%.
• New Construction: Homebuilders are expected to gain more market share by continuing to offer incentives like below-market mortgages and rate buydowns.
• You know I have been putting this out to many of you multiple times. I even sent you an actual case study from my recent buyer’s purchase the was a gain of incentives, price reduction, upgrades, and interest rate buy-down credit to translate into an $85,000 effect on less than $600,000 in purchase price.

Sales Volume

Home sales are projected to rise in 2026 to an average of about 4.244 million units. While this is an improvement, it remains below the historical 20-year average of 5.15 million.

[Graph Idea: A bar chart comparing historical sales peaks (7 million in 2005) vs. 2026 projections (+14% from NAR, +4.3% from Zillow)]

2026 Sales Volume Increase Projections:

• NAR: +14%
• Bright MLS: +9.0%
• Fannie Mae: +7.8%
• Zillow: +4.3%

Investor Activity 

Investors are not pulling back; instead, they are becoming more selective.

• Buying Intent: Approximately 68% of single-family rental investors plan to buy at least one more property in the next 12 months.
• Market Strategy: Successful deals in 2026 will be driven by well-priced opportunities and clear cash-flow narratives.

I look forward to seeing you in 2026!