The American housing market is entering 2026 with something it hasn't had in years: genuine uncertainty about who holds the upper hand. After a pandemic-era frenzy that saw home prices surge more than 40% nationally and sellers dictate terms, the balance of power is quietly shifting—and for buyers who've been waiting on the sidelines, the change couldn't come soon enough.

Redfin has dubbed this transition "The Great Housing Reset," and the data is starting to back up the headline. According to a CNBC survey of real estate agents, 37.5% now describe their local markets as "balanced," up from just 30% a quarter ago. More telling: 77% of agents expect 2026 to be better than 2025, suggesting the worst of the affordability crisis may be in the rearview mirror.

A Tale of Two Markets

The national picture masks dramatic regional differences that could define winners and losers in 2026. In supply-constrained markets across the Midwest and Northeast—think Buffalo, Cleveland, and Hartford—prices are projected to climb at rates well above the 2.2% national average. These cities never experienced the building boom that characterized Sun Belt metros, leaving even modest demand sufficient to push prices higher.

Contrast that with markets like Phoenix, Austin, and parts of Florida, where years of aggressive construction have created meaningful inventory. Cotality researchers project that some of these oversupplied markets could see prices decline by as much as 10% in 2026, a dramatic reversal from the double-digit appreciation of recent years.

"The housing market is showing signs of a rebalance—and a rebound—in 2026. While notable headwinds persist, the fundamental picture is improving for buyers."

— National Association of Realtors economists

Climate Anxiety Reshapes the Map

Perhaps the most surprising force reshaping housing demand in 2026 is climate anxiety. According to insurance provider Kin, a remarkable 49% of homeowners are considering a move this year specifically due to climate concerns—up from just 31% two years ago.

The implications for traditionally hot markets are sobering. The survey found that 58% of prospective buyers would avoid moving to Florida, while 52% would steer clear of California, citing extreme weather risks and insurance costs as primary concerns. Major metros in Florida and Texas are already leading the nation in annual market depreciation, a trend that climate worries could accelerate.

Insurance Costs Become Deal-Breakers

The climate story extends beyond natural disasters to the everyday reality of homeownership costs. Insurance premiums in disaster-prone areas have skyrocketed, with some Florida homeowners seeing their annual costs triple or quadruple. For buyers already stretched by elevated home prices and mortgage rates, these hidden costs are increasingly becoming deal-breakers.

Mortgage Rates: The 6% New Normal

If you're waiting for 3% mortgage rates to return, 2026 is unlikely to deliver that wish. Realtor.com forecasts an average rate of 6.3% for the year, a modest improvement from the 6.5-7% range that prevailed through much of 2025, but still roughly double the rates available just three years ago.

The silver lining: rates appear to have stabilized. After a volatile 2024-2025 period that saw 30-year fixed rates swing from 6% to 7.5% and back, the fourth quarter of 2025 saw rates trade in a relatively narrow 6.2-6.4% band. That predictability, even at elevated levels, gives buyers more confidence to make offers.

Washington, D.C.: The DOGE Effect

One market experiencing a unique form of disruption is Washington, D.C. Cotality data shows the capital has surged to become the second-fastest-depreciating market in the country—up from sixth just a month ago. Analysts attribute the shift to early impacts from the Department of Government Efficiency (DOGE) initiatives, which have sparked concerns about federal workforce reductions.

For investors and homebuyers eyeing the D.C. metro area, the situation bears watching. If DOGE-related uncertainty continues, it could create buying opportunities in a market that historically has been among the most stable in the nation.

What Buyers Should Do Now

The improving landscape doesn't mean buyers should rush in without a strategy. Here's how to position yourself for success in 2026:

  • Get pre-approved now: With inventory improving, you'll want to move quickly when the right property appears. Having financing lined up is essential.
  • Consider overlooked markets: The Midwest and Northeast offer better value than coastal metros, with prices that actually align with local incomes.
  • Factor in insurance costs: Before making an offer in any warm-climate market, get insurance quotes. What looks affordable at purchase may not be once you factor in $8,000-$15,000 annual premiums.
  • Be patient but decisive: The shift toward a buyer's market is gradual, not sudden. When you find the right property at the right price, don't overthink it waiting for further improvements.

The Bottom Line

After years of frustration, 2026 offers genuine hope for would-be homebuyers. The market isn't crashing—national prices are still expected to rise modestly—but the balance of power is shifting in ways that favor patience and preparation. Climate concerns, insurance costs, and regional inventory dynamics are creating opportunities that didn't exist a year ago.

For sellers, the message is equally clear: the days of listing any property at any price and receiving multiple offers above asking are over. Realistic pricing and proper preparation will be essential to attract buyers who now have more options and more leverage than at any point since before the pandemic.