If you've been waiting for the housing market to become less insane, Redfin has a message: your patience may finally be rewarded. The real estate brokerage is forecasting what it calls "The Great Housing Reset"—a yearslong period of gradual normalization that begins in earnest in 2026.

What 'The Great Reset' Actually Means

Redfin expects the median U.S. home-sale price to rise just 1% year-over-year in 2026. That's not a crash, but it's a dramatic deceleration from the double-digit gains of recent years. More importantly, it means income growth will finally outpace home-price growth for the first time since the pandemic began.

Translation: homes are becoming relatively more affordable, even if prices aren't falling in absolute terms.

The Mortgage Rate Outlook

Multiple forecasters project the 30-year fixed mortgage rate will average around 6.3% in 2026, down from approximately 6.6% in 2025. Fannie Mae's Economic and Strategic Research Group expects rates to end 2026 at 5.9%—still well above the sub-3% rates of 2021, but a meaningful improvement from recent highs.

Interest rates will likely stay below 6.25% for most of 2026 and could dip slightly below 6%, according to some forecasts. That's not a return to the era of essentially free money, but it's enough to meaningfully improve monthly payment calculations.

Sales Volume Finally Recovering

The National Association of Realtors' chief economist Lawrence Yun is forecasting a 14% nationwide increase in home sales for 2026, following 2025's stagnating levels. Realtor.com projects existing-home sales will rise 1.7% to 4.13 million—modest, but notable after years of decline.

Why the rebound? The infamous "lock-in effect" is slowly releasing its grip. Four out of five mortgage-holding homeowners still have a rate below 6%, giving many little incentive to move. But life events—job changes, growing families, divorces, retirements—eventually force transactions regardless of rate differentials.

Where Prices May Actually Fall

Here's where it gets interesting: Realtor.com analysis indicates property prices are forecast to decline in 22 of the largest 100 U.S. cities in 2026. The national median may rise slightly, but many individual markets could see genuine price corrections.

Markets that saw the most aggressive pandemic-era price gains—particularly in the Sun Belt and Mountain West—may be most vulnerable to give-back as remote work migrations reverse and local economies normalize.

A More Balanced Market

Real estate analysts are describing 2026 as potentially the "most balanced housing market" since the pandemic. That means:

  • More inventory for buyers to choose from
  • Less competition (fewer bidding wars)
  • More negotiating power on price and terms
  • Longer days on market, giving buyers time to think

The Bottom Line

If you've been priced out of the housing market, 2026 may be your year to re-engage. The combination of moderating prices, slightly lower mortgage rates, and improved inventory could create the best buying conditions in half a decade. That doesn't mean it'll be easy—affordability remains historically challenged—but the direction of travel is finally in buyers' favor.