After years of frozen housing activity, the National Association of Realtors is making a bold prediction: home sales are poised to surge 14 percent in 2026, marking what could be the first meaningful thaw in America's housing market since the post-pandemic interest rate shock.

The forecast from NAR chief economist Lawrence Yun represents one of the most optimistic calls in the real estate industry, significantly outpacing predictions from other major forecasters. But behind the headline number lies a more nuanced story about affordability, inventory, and the structural forces reshaping American housing.

The Case for Optimism

Several factors underpin NAR's bullish outlook. Mortgage rates have drifted lower from their 2024 peaks, with the average 30-year fixed rate now hovering around 6.3 percent—still elevated by historical standards but a meaningful improvement from the 8 percent levels that paralyzed the market.

More importantly, household income growth has begun to outpace home price appreciation in many markets for the first time in years. This gradual improvement in the income-to-price ratio is slowly making homeownership more accessible.

"We're finally seeing the beginning of a normalization process. It won't happen overnight, but the fundamental drivers that locked up the housing market are starting to ease."

— Lawrence Yun, Chief Economist, National Association of Realtors

The Great Housing Reset

Redfin has characterized 2026 as the year of "The Great Housing Reset"—not a dramatic crash, but rather a gradual normalization after years of extraordinary disruption. This reset is expected to bring:

  • Increased inventory: Realtor.com projects an 8.9 percent increase in existing home inventory
  • Moderate price growth: NAR expects median home prices to rise 4 percent nationally
  • More transaction volume: Sellers who have been "locked in" to low-rate mortgages may finally begin to move

Why Homeowners Are Finally Moving

The "lock-in effect"—where homeowners refuse to sell because they'd be trading a 3 percent mortgage for a 6 percent one—has suppressed inventory for years. But several factors are beginning to crack this logjam:

  • Life events: Births, deaths, divorces, and job changes eventually force moves regardless of rates
  • Portfolio rebalancing: Investors who accumulated properties during the low-rate era are beginning to sell
  • New construction: Builder inventory provides alternatives to existing homes
  • Rate normalization: As lower-rate mortgages age, the psychological barrier to moving diminishes

The Skeptics Speak Up

Not everyone shares NAR's enthusiasm. Several industry analysts have questioned whether a 14 percent jump is realistic given persistent affordability challenges.

Zillow projects a more modest 4.3 percent increase in existing home sales, forecasting approximately 4.26 million transactions. Realtor.com is even more conservative, predicting just 1.7 percent growth, while Redfin expects around 3 percent.

"The bottom line for 2026 is that it will be a transitional year. There won't be a crash or a boom, just the market finding its footing after years of extraordinary disruption."

— Chris Reis, Broker at Compass, Seattle

Regional Divergence Persists

Any national forecast obscures significant regional variation. The housing market's great divide—with the Northeast and Midwest outperforming the Sun Belt—shows no signs of closing.

In markets like Austin, Phoenix, and Tampa, pandemic-era migration has reversed and insurance costs have soared, putting downward pressure on prices. Meanwhile, rust belt cities with more affordable housing stock continue to see steady demand.

CoreLogic has identified 22 metropolitan areas where home prices could actually decline in 2026, including several formerly hot markets in Florida and Texas.

What Mortgage Rates Will Do

The trajectory of mortgage rates remains the single most important variable for housing activity. While rates have fallen from their peaks, Zillow notes that rates are "unlikely to fall below 6 percent in 2026."

Most forecasters expect the average 30-year rate to hover around 6.3 percent for the year—a slight improvement from 2025's 6.6 percent average, but not low enough to dramatically change affordability calculations for most buyers.

First-Time Buyers: Still Struggling

Despite the optimistic forecasts, first-time homebuyers continue to face daunting headwinds. The share of first-time buyers has fallen to historic lows, and many young Americans have given up on homeownership entirely.

Student loan debt, rising rents that make saving for down payments difficult, and competition from investors have all contributed to this generational shift in housing expectations.

Investment Implications

For investors, the housing outlook carries implications across multiple sectors:

  • Homebuilders: Companies like D.R. Horton, Lennar, and PulteGroup could benefit if demand materializes
  • REITs: Single-family rental REITs may see less favorable acquisition environments if for-sale inventory rises
  • Mortgage lenders: Increased transaction volume would boost origination income
  • Home improvement: New buyers typically spend on renovations, benefiting Home Depot and Lowe's

The Bottom Line

Whether you believe NAR's 14 percent call or the more conservative forecasts, the directional consensus is clear: housing activity is expected to increase in 2026. After years of paralysis, the market appears poised to shake off at least some of its malaise.

For potential buyers, this means more options but also more competition. For sellers, it means better liquidity but potentially less pricing power. And for the economy as a whole, a healthier housing market would provide a meaningful tailwind at a time when other sectors face uncertainty.