A Turning Point Emerges in the Housing Market Leading Into 2026

After years of elevated mortgage rates and buyer hesitation, quiet momentum is starting to build within the housing market. Sellers are beginning to return. Buyers are stepping back in. And for the first time in a long while, the market is showing real signs of movement again.

This isn’t a sudden boom. But it is a meaningful shift—one that could help lay the groundwork for a stronger housing market in 2026.

So what’s behind this renewed activity? Here are three key trends that are gradually bringing energy back to the market.

1. Mortgage Rates Are Trending Lower

Mortgage rates naturally rise and fall, especially during periods of economic uncertainty. Short-term fluctuations are expected. What matters more is the broader direction—and for much of this year, that trend has been downward.

In fact, the past few months have delivered some of the most favorable rates seen in 2025. According to Freddie Mac Chief Economist Sam Khater, lower rates on a median-priced home can translate into thousands of dollars in annual savings, signaling slow but steady improvements in affordability.

Why does this matter? Because lower rates directly impact what buyers can afford. Reduced borrowing costs mean greater purchasing power. For example, Redfin data shows that a buyer with a $3,000 monthly budget can now afford about $25,000 more home than they could a year ago. That added flexibility is helping fuel renewed activity.

2. More Homeowners Are Willing to Sell

For a long time, many homeowners chose to stay put to avoid giving up their ultra-low mortgage rates. This “lock-in effect” kept inventory extremely limited. While some homeowners are still holding on, that pressure is starting to ease as rates decline.

At the same time, life changes—such as job moves, growing families, or downsizing—are pushing more owners to list their homes. According to Realtor.com, the number of homes for sale has risen significantly and is approaching levels not seen in nearly six years.

That return toward more balanced inventory is a positive development. Buyers now have more choices, and the market is beginning to stabilize.

3. Buyers Are Slowly Returning

Sellers aren’t the only ones making moves. With increased inventory and improving affordability, more buyers are re-entering the market. The Mortgage Bankers Association reports that purchase applications are up compared to last year, a clear sign that demand is rebuilding.

Looking ahead, economists from Fannie Mae, the MBA, and the National Association of Realtors all anticipate modest growth in home sales as the market moves into 2026.

This recovery won’t happen overnight. It’s not a rush—but itisconsistent progress. And for many, it’s a welcome change after years of slowdown.

Bottom Line

After several challenging years, the housing market is finally gaining traction. Falling mortgage rates, growing inventory, and rising buyer interest all point to a market turning a corner.

Connect with a trusted local real estate professional to understand what these changes mean for you—and how to take advantage of the opportunities ahead in 2026.