Will Home Prices Drop in 2026? Expert Predictions Across Major Markets

The short answer: probably not a broad, national price crash in 2026 — but the picture will be patchy. Some markets look set for modest gains, others for flat-to-small declines, and local factors (jobs, supply, interest rates, policy) will determine winners and losers. Below I break down the forecasts and the economists and industry analysts behind them, region by region, and end with what buyers and sellers should watch.

---

The U.S.: stabilization, not a collapse — mixed forecasts

U.S. forecasts for 2026 cluster around stability or modest gains, but not everyone agrees on how much. The National Association of Realtors (NAR) and several market commentators see mild appreciation as mortgage rates ease and inventory improves, while model-based forecasts (Fannie Mae, Zillow) project only tiny gains — in some cases below expected inflation — implying little real, inflation-adjusted wealth growth from housing. For example, headline projections collected by recent coverage show the NAR near a ~4% increase in home values for 2026, while Fannie Mae and Zillow forecast around 1–1.5% growth — a big spread that reflects differences in methodology and timing assumptions about interest rates. Regions that saw pandemic-era surges (parts of Florida, Arizona, and Texas) are cooling, while job-rich metro cores and more affordable inland Midwest and Northeastern markets look more resilient.

What this means practically: expect slower, uneven price growth in national averages. Markets with improving job markets and constrained supply could still see respectable gains; overheated, supply-heavy, or highly speculative markets will face the most downward pressure.

---

Canada: split views — small gains in some forecasts, modest declines in others

Canadian forecasts are more fragmented. Large broker and bank forecasts differ province by province — Royal LePage was projecting small national gains (roughly ~1% YoY in some seasonal measures), whereas other industry commentators (some Re/Max analyses) expected a modest price pullback (Re/Max flagged scenarios that show average prices could fall several percent in 2026 in certain balanced-to-buyer markets). The divergence reflects local inventory increases, mortgage rule changes, and how much central-bank-driven borrowing costs adjust through 2026.

Bottom line: homebuyers should treat Canada as highly local — watch provincial labour markets, immigration-driven demand, and whether listings continue to increase.

---

United Kingdom: modest growth likely, but regional differences matter

UK-wide forecasts generally point to small positive growth in 2026 as borrowing conditions ease and buyer affordability improves — Rightmove and several analysts suggest asking prices could rise around ~2% in 2026, with some professional forecasters (and ratings agencies tracking Europe) expecting 2–4% in many areas. But London and other premium coastal or overheated hotspots may lag, while lower-priced northern regions and parts of Scotland and Wales could outperform thanks to relative affordability and local demand. Policy moves (taxation, revaluations) could add volatility — for instance, tax revaluations and proposed levies on high-value homes are political wildcards that may affect sentiment for specific segments.

So: gentle upward pressure overall, but don’t treat “UK” as uniform — regional segmentation is strong.

---

Australia: still positive but slowing — affordable suburbs to lead

Australian analysts are broadly predicting continued price growth in 2026, though slower than the prior surge. Large property groups and banks estimate growth might moderate — AMP, for example, forecast a slowdown from very strong growth to something in the mid-single digits (estimates like ~5–7% in some commentary), with the strongest gains likely in more affordable suburbs where first-home buyer demand (and government incentives) matter most. Key risks are affordability, macroprudential policy from APRA, and any surprise rate moves by the RBA.

Implication: good pickings for buyers in cheaper suburbs if wage growth and lending remain supportive.

---

Europe (excluding UK): steady but modest — 2–4% range in many markets

Large credit and ratings houses and commercial real-estate advisors expect steady, modest house-price growth across much of Europe in 2026 — often in the low single digits (2–4%) — driven by constrained new supply, stabilising debt markets, and selective demand (logistics/energy transition hubs, resilient urban centers). Still, national divergence will be significant: some Nordic, Central European, and Western markets remain robust; others suffer from weak local economies or oversupply. Analysts emphasize tighter construction pipelines and improving debt/equity availability next year as tailwinds.

Takeaway: no homogeneous European crash, but expect differing dynamics by country and city.

---

Who’s likely to see declines (or underperformance)?

Across sources, the markets most likely to see price declines or underperformance in 2026 are:

• Markets that had the biggest pandemic/remote-work spikes (parts of Sun Belt U.S., some smaller Canadian hot spots) where affordability has already eroded and sellers are taking gains.
• Regions facing local economic weakness or major tax/valuation shocks (for example, areas affected by sudden policy changes or where overvaluation concerns are being actively addressed). UK high-value tax revaluations are a live example of political risk that could depress values at the top end.
• Markets with rising inventory and weak demand — if listings increase faster than buyers return, some markets can see small corrections (this is one reason some Canadian provinces may have downward pressure).

---

And who’s likely to outperform?

Outperformers tend to be job-rich metros, affordable secondary cities, and climate-/supply-resilient areas:

• U.S. midsize Midwest and Northeast cities with improving fundamentals.
• UK northern and regional markets with better price-to-income ratios.
• Australian affordable suburbs favored by first-home buyers.

---

Common threads in expert forecasts — the main drivers

1. Interest rates & how central banks behave in 2026. If real borrowing costs fall, demand will lift prices; if they stay higher than expected, affordability will cap growth. Many forecasts assume some rate easing, but not a return to the very low rates of the 2010s.
2. Inventory and new construction. Tight supply supports prices; a surge in listings or new builds would reduce pressure. Europe’s slowing construction pipeline is one reason some expect continued modest gains.
3. Local labour markets & migration. Areas with job growth or inbound migration will outperform.
4. Policy and taxes. New taxes, revaluations, or macroprudential rules (e.g., Canada/Australia bank rules) can quickly change the near-term outlook.

---

Practical advice for readers (buyers, sellers, investors)

• Buyers: focus on local fundamentals (jobs, schools, supply pipeline). If you plan to stay 5+ years, small national swings matter less than local trends. Lock in mortgage features that match your risk tolerance if rates are volatile.
• Sellers: realistic pricing in markets that saw earlier big gains is crucial — buyers have more choices and are price sensitive.
• Investors: favour markets with durable demand (jobs, affordability relative to incomes), and be wary of top-end, tax-sensitive segments. Diversify geographically where possible.

---

Bottom line

Most expert forecasts for 2026 point to a year of stabilization and modest, highly-regional growth rather than a broad collapse. Which locales win or lose will depend on local affordability, jobs, supply, and central-bank moves. Economists and industry forecasters aren’t unanimous — expect a range from slight declines in weaker local markets to mid-single-digit gains in constrained, high-demand areas. The safest strategy is to treat property decisions as hyper-local, use forecasts as one input (not gospel), and focus on personal timelines and risk tolerance.