It may (finally) be easier to buy a home this year

It was supposed to be the year that America's real estate market came back to life — until it wasn't.

Ever since the Federal Reserve jacked up borrowing rates to fight inflation in 2022, real estate agents, economists, and politicians of all stripes have grumbled about the sluggish pace of home sales and the market's steep price of admission. But near the end of 2024, housing prognosticators began reporting signs of a thaw: Mortgage rates had hit two-year lows, affordability appeared to be improving, and there were finally a few more options for buyers. 2025 was poised to be the comeback year for homebuying.

"All the ingredients were there for a more robust recovery," Kara Ng, a senior economist at Zillow, tells me. "And it just didn't happen."

It's no mystery why. President Donald Trump's trade war, combined with a tepid labor market and a bump in mortgage rates, led many potential movers to stay put. Those who had a job or a cheap home loan held onto those things for dear life. Buyers balked at prices. Home sales last year remained disappointingly flat.

It's a new year, though, and housing forecasters and real estate agents are once again humming a hopeful tune.

"The data right now is suggesting there's more demand," says Ethan Flynn, an agent in the Nashville area. "I'm optimistic."

Despite a recent spike in mortgage rates, thanks to Trump's short-lived, Greenland-inspired tariff threats, there are legitimate signs of sunnier days ahead for real estate. Three key factors — prices, available inventory, and yes, even mortgage rates — support the tentative optimism. The recent data has been enough for a pair of economists to proclaim this the year of The Great Housing Reset, anticipating conditions that could spur more buyers and sellers to shake off the cobwebs and make moves.

Given last year's false start, it's fair to be skeptical that this time is any different. Maybe everyone's just scrounging for good news to beat back the January malaise. Maybe they're gluttons for punishment with boundless appetites for prediction whiffs. Maybe I'm falling into the same trap as I try to counter a barrage of doom-and-gloom headlines with good tidings. Or maybe, just maybe, the market is actually heating up.

At risk of jinxing it all, here are the reasons to be hopeful about homebuying in 2026.

Mortgage rates are trending down

Predicting mortgage rates is a fool's errand — just ask anyone who was confident the typical rate would slip under 6% last year. Agents and economists keep trying, though, because mortgage rates are among the most important factors holding up the market. Buyers and sellers are especially sensitive to the kinds of big swings that we've seen over the past few years. When rates plummeted in 2021, many rushed to lock up loans in the 3% range or lower, fueling the buying frenzy. Then the rate hikes a couple of years later prompted both buyers and sellers to pump the brakes. These moves have solidified the state of play since: Lots of people holding onto the mortgages they got a few years ago, or holding off until borrowing money gets cheaper.

Given their central role in the affordability picture, it's no wonder that everyone in the real estate industry is trying to read the mortgage-rate tea leaves. Thankfully for hopeful buyers (and their agents), the trend over the past few months points to sweeter deals on the horizon. Rates have ticked down to around 6.2%, more than half a percentage point lower than a year ago. That kind of dip could save buyers hundreds of dollars a month on interest payments. Assuming you got the average mortgage rate and put down 20% on the typical home, your monthly housing costs would be about $177 cheaper than the peak in October 2023, a Zillow analysis found. The savings pile up even higher in pricier cities.

Beyond dreams of lower rates, the march of time also means that people are more likely to make a move this year. As the rock-bottom rates of 2021 fade further into the rearview mirror, people start to get accustomed to the current levels. While buyers and sellers may still be pining for those bygone loans, they can only hold out for so long. And as life milestones, like getting married or having kids, inevitably crop up, people are more likely to suck it up and make a move.

"Buyers and sellers have begrudgingly come to terms that you're not going to get 3% rates anytime soon," Ng tells me, "and they're moving on with their lives."

Buyers have more options

While the overall market remained stuck in place last year, homebuyers who did try their luck enjoyed at least one bright spot: more choices. With homes taking longer to sell and homeowners inevitably having to move, active inventory — or the number of houses on the market — increased by about 30% year-over-year in May and June, according to Realtor.com. The encouraging news came with a couple of caveats, though. While active inventory leaped past pre-COVID levels in softer markets like Austin and Tampa — and prices dropped accordingly — the nationwide pool of available homes continues to lag 2019 levels. The inventory boom has also cooled off since that summer peak: The number of active listings in December was up just 12% from the year prior, per Realtor.com, and remained 12.5% below the average December levels from 2017 to 2019.

Buyers still have more choices than at any point in the post-COVID era, though it remains to be seen how many for-sale signs make their way to front yards this spring. Sellers have historically been pretty resistant to slashing prices in the face of lukewarm interest or more competition — as we saw over the summer, many simply yanked their home off the market and resolved to test the waters another time. They may only be able to stave off a move for so long, though.

"Some of those folks are growing less patient, and so prices slowly start to ease down," says Mike Simonsen, the chief economist at the brokerage firm Compass and founder of Altos Research. "This is really the culmination of four years of rising inventory, four years of sellers waiting and hoping that prices would appreciate."

Small but steady price growth

This year probably won't deliver much drama in home prices, which should be welcome news for both buyers and sellers. Wild swings in home values, either up or down, usually aren't good for buyer morale. Even if home shoppers are rooting for more affordability, plummeting prices would likely signal bigger problems in the economy — the kinds of stuff, like mass layoffs or financial turmoil, that prompt buyers to pump the brakes.

The national median price ended the year basically flat — Redfin reported just a 0.4% year-over-year increase in December. The placid overall number obscures some interregional variations: Prices have been falling slightly in much of the lower half of the US, or Sun Belt, and rising in the Northeast and Midwest, where there's relatively more demand and fewer homes for sale. For 2025, most economists are forecasting a modest home-price increase in the low single digits. Zillow, for example, expects the national median to rise by a little less than 2% this year, which should give incomes the chance to grow faster than home values. Redfin also projects just a 1% increase. Bear in mind, though, that your local market may shift to a greater degree, depending on how many homes are piling up for sale.

The reason for this muted growth is simple: Economists aren't seeing anything in the data that would indicate a sudden surge or crash. Affordability may be loosening, but the cost of homebuying hasn't eased enough to trigger a cascade of interest, and while inventories are growing, there hasn't been a trigger for people to dump their homes willy-nilly. Daryl Fairweather and Chen Zhao, economists at Redfin, have dubbed this the year of The Great Housing Reset, with wage growth finally expected to outpace home-price increases. That could make homebuying more appealing if sustained over a few years. It's not the kind of sudden shift that would open the floodgates, but again, modest growth is preferable to wild swings in either direction.

"The whole experience for people, even if they've done it many times, it's stressful," says Phil Crescenzo Jr., vice president of the Southeast division at Nation One Mortgage. "You want the market to be boring."

Chewing over this story, Crescenzo's line stuck with me: Boring is better. After the tumult of the pandemic-era housing market, a little nothing-to-see-here might be exactly what's needed for buyers and sellers to take the plunge.

Even the economists forecasting a pickup aren't getting ahead of themselves. Simonsen, for example, expects just a 5% increase in home sales volume. That may not sound like a lot, but it would represent more than 200,000 additional sales, given that roughly 4.05 million existing homes traded hands last year. You won't find mortgage loan officers dancing in the streets, or lines at open houses stretching down the block like they used to. Homebuying without the hysteria, however, should be welcomed by people on both sides of the closing table.

That doesn't mean this year will be worry-free. The big concern among real estate gurus I spoke to is the prospect that buyers won't return to the market as hoped, either because of lingering affordability concerns or, more worryingly, the kind of broader economic uncertainty that keeps people stuck in place. If that's the case, we may have bigger issues on our hands than a middling housing market.

"Prices are lower, there are more options, and you have lower mortgage rates," Flynn, the agent in Nashville, tells me. "If you can't get more demand with all of that happening, then that, to me, is a very big problem."

James Rodriguez is a correspondent on Business Insider's Discourse team.