After years of frustration, bidding wars, and affordability crises, American homebuyers are finally catching a break. Real estate analytics firm Redfin has dubbed 2026 "The Great Housing Reset," predicting the most balanced market conditions since before the pandemic—and actual price declines in nearly two dozen major metropolitan areas.

The forecast represents a dramatic shift from the seller-dominated dynamics that have defined housing since 2020. While predictions don't call for a crash or dramatic correction, Redfin sees a long, slow shift toward equilibrium that will gradually restore power to buyers who have spent years on the sidelines, priced out and discouraged.

Where Prices Will Fall

Redfin's analysis identifies 22 of the nation's largest 100 metropolitan areas where home prices are forecast to decline in 2026, with most concentrated in two regions: the Southeast and the West.

Florida cities dominate the list, with Tampa, Jacksonville, and several smaller metros expected to see meaningful price pullbacks. The Sunshine State's pandemic-era boom—fueled by remote work migration, no state income tax, and relative affordability compared to expensive coastal markets—appears to be reversing as insurance costs soar, climate risks become more apparent, and early movers reassess their decisions.

"We're seeing what happens when a market overheats," explained Daryl Fairweather, Redfin's chief economist. "Florida attracted huge population inflows in 2021 and 2022, which pushed prices to levels that don't make sense relative to local incomes. Now that migration has slowed, there's more supply than demand, and prices are adjusting."

Western markets face similar dynamics. Cities like Boise, Phoenix, and parts of Texas that experienced explosive pandemic-era growth are now grappling with oversupply as builders who ramped up construction find fewer buyers able to afford the finished homes.

How Much Will Prices Drop?

Redfin's forecast doesn't predict a housing crash. Instead, the firm expects modest declines ranging from 1% to 4% in the affected markets—enough to provide some relief to buyers but not the dramatic corrections that would threaten homeowners with negative equity or destabilize the financial system.

These declines contrast with national projections showing slight price growth. Zillow predicts home values nationwide will rise about 1.2% in 2026, while Realtor.com forecasts 2.2% growth. The divergence reflects increasing variation across local markets, with some cities seeing declines while others maintain modest appreciation.

The Factors Driving the Reset

Several converging trends are creating the most buyer-friendly market in years. Understanding these dynamics helps explain why Redfin expects sustained improvement rather than a temporary blip.

Inventory Is Increasing

After years of severe shortages, housing inventory is finally growing. Redfin reports 37% more sellers than buyers entering the market in recent months—a dramatic reversal from pandemic-era dynamics when buyers outnumbered sellers by wide margins.

This shift reflects both new construction coming online and existing homeowners who sat tight during the rate surge beginning to list properties. While inventory remains below pre-pandemic levels in many markets, the direction of change favors buyers.

Mortgage Rates Are Moderating

Mortgage rates, while still elevated by historical standards, are trending downward from the 7%+ peaks seen in 2023. Redfin expects rates to average 6.3% in 2026, compared to 2025's 6.6% average—a small but meaningful improvement that expands the pool of qualified buyers.

More importantly, buyer psychology is adjusting. The dream of 3% mortgages is dead, and purchasers are making peace with 6%+ rates as the new normal. This psychological shift is bringing sidelined buyers back into the market, increasing transaction volume even if affordability remains challenging.

Price Growth Is Stalling

Even in markets where prices aren't declining outright, appreciation has slowed dramatically. Inflation-adjusted home prices are falling in most metros as nominal price growth fails to keep pace with inflation. This dynamic gradually improves affordability through real price erosion even when sticker prices hold steady.

Combine moderating prices with wage growth—which continues outpacing inflation in many sectors—and the affordability picture slowly improves. It's not dramatic, but the trend line is moving in buyers' favor for the first time in years.

What Buyers Can Expect

The Great Housing Reset doesn't mean buyers will suddenly find themselves in a paradise of cheap homes and desperate sellers. Instead, Redfin predicts a gradual normalization toward pre-pandemic market conditions characterized by balance rather than extreme seller or buyer advantage.

Bidding wars should become less common as inventory expands. Buyers will have more time to conduct inspections and secure financing without facing pressure to waive contingencies or make above-asking offers. Sellers may need to make repairs or offer concessions that would have been unthinkable during the pandemic boom.

"We're moving from a market where sellers call all the shots to one where buyers have some negotiating power," Fairweather said. "That doesn't mean houses will be cheap, but it means the dynamics are rebalancing toward something more sustainable."

Home Sales Will Increase

Redfin projects existing home sales will rise 3% in 2026, while Zillow forecasts a 4.3% increase to 4.26 million sales. These projections remain well below the 5-6 million annual sales typical in normal markets, but they represent movement in the right direction after years of depressed transaction volumes.

Increased sales benefit everyone. Homeowners who have felt trapped by low mortgage rates will have more confidence they can sell and find suitable replacement properties. First-time buyers will face less competition from move-up buyers who are no longer paralyzed by the lock-in effect. Real estate agents and mortgage lenders will welcome higher volumes after a brutal downturn.

Not Everyone Wins

While the reset benefits buyers, it creates challenges for recent purchasers who bought at market peaks. Homeowners who purchased in 2022 or 2023 in markets now experiencing declines may find themselves with little to no equity—or even underwater if they put down minimal down payments.

This dynamic is particularly acute in markets like Austin, where prices soared 40%+ during the pandemic before beginning to retreat. Owners who bought near the top with 3-5% down payments could face difficult decisions if job changes or life circumstances force them to sell.

Builders also confront challenges. Developers who broke ground on projects when prices were surging must now complete and sell homes in softening markets. Some builders are offering significant incentives—mortgage rate buydowns, free upgrades, price reductions—to move inventory, compressing margins and raising questions about future construction activity.

The Long View

Redfin characterizes 2026 as the beginning of a long, slow recovery rather than a dramatic reset that solves housing affordability overnight. The firm expects it will take years of flat-to-modest price growth, rising incomes, and gradually falling mortgage rates to restore the affordability levels that prevailed before the pandemic.

"This isn't a quick fix," Fairweather emphasized. "Housing affordability was destroyed over 3-4 years of explosive price growth. It will take at least as long to repair the damage, and even then, we're not going back to 2019 price levels in most markets."

The structural shortage of housing supply continues to support prices even as short-term dynamics favor buyers. America has underbuilt housing for more than a decade, creating a deficit of several million units. Until that supply gap closes—a process requiring years of sustained construction—downward price pressure will remain limited.

Policy Wild Cards

Government policy could accelerate or slow the reset. Down payment assistance programs, first-time buyer tax credits, or changes to mortgage regulations could boost demand and prop up prices. Conversely, economic policies that trigger recession or sharp rises in unemployment could send the market into genuine decline.

Federal Reserve policy remains a critical variable. If the central bank cuts rates more aggressively than currently projected, mortgage rates could fall faster than expected, reigniting demand. If inflation proves stickier and the Fed holds rates higher longer, mortgage rates might remain elevated, keeping buyers sidelined.

"After years of frustration, buyers are finally getting some relief. It's not dramatic, it's not quick, but the market is rebalancing. That's good news for anyone who has felt priced out of homeownership."

— Redfin Chief Economist Daryl Fairweather

As 2026 begins, the housing market stands at an inflection point. The extreme seller advantage that defined the pandemic era is fading, replaced by more balanced conditions that give buyers a fighting chance. Whether this reset delivers on its promise depends on countless variables—interest rates, economic growth, job markets, construction activity, and consumer confidence among them. But for the first time in years, the trend lines are moving in buyers' favor. That alone represents progress worth celebrating.