The “Next Era” of Housing: Why 2026 Could Feel Different (and Why Affordability + Hiring Matter Most).

The “Next Era” of Housing: Why 2026 Could Feel Different (and Why Affordability + Hiring Matter Most)

After years of “frozen” movement—tight inventory, stubborn prices, and mortgage rates that kept both buyers and sellers on the sidelines—several fresh 2026 outlooks argue the U.S. housing market is entering a new phase. The core idea isn’t a dramatic crash or a sudden boom. It’s a slow thaw: affordability improves gradually, inventory inches up, and the market starts functioning more normally—but only if the job market (hiring) cooperates.

Below is a complete, blog-style breakdown of what the newest research is saying—and what to watch as 2026 approaches.

1) The headline shift: from “stagnation” to “slow normalization”

Compass Chief Economist Mike Simonsen describes 2026 as the start of a “new era” after roughly four years of abnormal conditions (pandemic distortions, rate volatility, affordability shock, uneven supply). In this next phase, the expectation is:

Sales can finally grow again (because there’s a bit more inventory and slightly better financing conditions)
Affordability improves (because incomes rise faster than prices, and rates ease modestly)
Expectations reset (buyers and sellers adapt to a world that isn’t 3% mortgages and frenzy bidding wars)

Redfin frames a similar story and even gives it a name: “The Great Housing Reset”—a multi-year period where affordability improves mostly through time (wages catching up), not through a fast price drop.

2) Affordability: the “improvement” is real, but it’s not magic

Most of the newer forecasts agree on the direction: affordability should improve in 2026. The disagreement is about how much and how fast.

What’s driving affordability gains?

A) Prices flattening (or rising very modestly)
Compass expects home prices to be close to flat nationally (around +0.5% in its outlook).
Redfin similarly expects only a small increase (~1% YoY) in the median sale price.

B) Mortgage rates easing—slightly
Compass projects mortgage rates trading roughly 5.9%–6.9% with an average around 6.4%.
Redfin’s call is in the same neighborhood, with a ~6.3% average 30-year fixed rate.

C) Incomes rising faster than home prices
This is the lynchpin. Both Compass and Redfin explicitly argue that a sustained period of wage growth outpacing home-price growth is what gradually restores affordability.

Realtor.com adds a useful “real world” affordability marker

Realtor.com forecasts that the monthly payment to buy a typical home could slip to 29.3% of median income, dipping below the often-cited 30% affordability threshold for the first time since 2022. They call the gains “modest,” but meaningful.

Bottom line: The “better” affordability story for 2026 is mostly a slow grind—flatter prices + slightly lower rates + rising incomes—not a sudden rescue for first-time buyers.

3) Hiring: the overlooked factor that determines whether the market actually “moves”

Here’s the part many casual housing discussions miss: people don’t buy and sell homes just because rates drop. They move because life changes—especially jobs.

Simonsen’s research highlights that hiring (job creation) directly affects mobility, and mobility is the oxygen of the housing market. In his framework, improving affordability helps, but a weak hiring environment can keep transactions muted because fewer people feel safe making a large financial leap—or they simply don’t have a reason to relocate.

He explicitly flags hiring as one of the key signals to watch heading into spring 2026, alongside new listings and pending sales.

Redfin echoes a related risk: even if affordability improves, a softer labor market (or fear of job loss) can limit buyer activity.

Translation: In 2026, you can see affordability “improve on paper,” but if hiring stays cautious, the market may still feel sluggish—especially in regions dependent on job growth.

4) Inventory and “shadow inventory”: the supply release valve

Inventory is expected to improve, but the type of supply matters.

Regular inventory growth

Compass points to about 10% growth in homes on the market nationally in 2026.
Realtor.com projects +8.9% active listings in 2026 (third straight year of gains), while noting inventory could still remain below pre-2020 norms.

Shadow inventory (the “pulled listing” effect)

Simonsen and Compass also emphasize a huge pool of sellers who wanted to sell in 2025 but pulled listings instead—creating “shadow inventory.” Real Estate News cites an estimate around 150,000 withdrawn listings nationally, and Compass notes that a large share of listings were being withdrawn in late 2025, implying pent-up supply that could return when conditions improve.

Why it matters: If mortgage rates and hiring improve enough, some of this shadow inventory may come back, creating more options for buyers and unlocking “double transactions” (sell + buy), which boosts overall sales.

5) A divided market: the “next era” won’t feel equal everywhere

Even the optimistic forecasts repeatedly warn the recovery won’t be uniform.

Simonsen describes divides by income (“have” vs “have-not”), mortgage-rate lock-in, and geography (for example, Northeast vs parts of the South/Sun Belt behaving differently).
NAR similarly highlights that recovery will vary by metro, with the biggest gains where housing costs and incomes start aligning better.

So “better in 2026” is likely true nationally in aggregate, while some local markets stay tight and expensive and others soften meaningfully.

6) What the forecasts say about 2026 sales volume

This is where forecasts start to diverge more:

Compass: existing home sales could reach about 4.25 million (about +5% from 2025 in its outlook).
Redfin: predicts existing home sales end 2026 up about 3%, with an annualized pace around 4.2 million.
NAR: forecasts a bigger jump—about a 14% increase in existing home sales—assuming lower rates and higher inventory pull more buyers back in.

Why the gap? Different assumptions about how quickly mortgage rates fall, how quickly inventory returns, and—again—whether hiring/mobility improves enough.

7) Practical takeaways for 2026

If you’re a buyer

You may finally get more choice (inventory) and slightly better financing conditions than the last couple of years.
But don’t expect affordability to become “easy.” The improvement is incremental, and many first-time buyers will still face tough tradeoffs.

If you’re a homeowner thinking of selling

Watch for signs of a spring 2026 thaw: rising new listings, stronger pending sales, and local hiring trends.
If you pulled a listing in 2025, you’re part of the “shadow inventory” story—and 2026 could be the year those sellers re-test the market.

If you work in real estate (agents, lenders, builders)

Expect more rate-sensitive buyers to reappear if rates move closer to 6%. NAR argues even a 1-point rate drop can expand the pool meaningfully.
Pricing strategy matters more in a market where buyers fixate on monthly payment and have more options.
Regional strategy matters: 2026 may be one of the more geographically split markets in years.

The real thesis: 2026 is less “boom or bust,” more “back to basics”

The best summary of the “next era” idea is this:

Housing starts acting like housing again.
Affordability improves slowly, transactions pick up cautiously, and the market’s direction hinges on two fundamentals:

Affordability math (prices vs wages vs rates)
Hiring and mobility (whether people feel secure enough to move)

If those line up, 2026 won’t just be “another forecast year”—it could be the first chapter of a longer normalization cycle.