The Housing Market Is Turning a Corner Going into 2026

For years, the housing market felt like it was stuck in a low-gear grind. High mortgage rates caused buyers to hesitate, and sellers, wary of giving up their ultra-low existing rates, decided to stay put.

But look closely. Beneath the surface, the momentum is quietly building.

Sellers are reappearing. Buyers are re-engaging. And for the first time in what feels like forever, there’s movement happening again.

No, this isn't a surge—not yet. But it is a genuine shift, and it’s one that could set the stage for a much stronger, more balanced year in 2026.

So, what exactly is driving this comeback? Here are the three big trends slowly breathing life back into the housing market right now.

1. Mortgage Rates Have Been Coming Down

Mortgage rates will always experience their ups and downs. Especially with the current economic uncertainty, some volatility is to be expected. But when you zoom out, it’s the larger trend that matters most.

And the larger trend? Rates have been trending down for most of this year.

(Note: Insert graph showing the general downward trend of mortgage rates for the year)

In fact, over the last few months, we've seen the best rates of 2025. This downward movement has a massive impact on affordability.

According to Sam Khater, Chief Economist at Freddie Mac:

“On a median-priced home, this could allow a homebuyer to save thousands annually compared to earlier this year, showing that affordability is slowly improving.”

Why this matters for you:

A lower rate directly changes what you can afford. Lower borrowing costs translate into more buying power. Data from Redfin shows that a buyer with a $3,000 monthly budget can now afford roughly $25,000 more home than they could one year ago. That's a significant difference, and it's a primary reason activity is starting to pick up.

2. More Homeowners Are Ready To Sell

For a long time, the infamous "lock-in effect" kept inventory tight. Homeowners didn’t want to trade their 3% mortgage for a 6% mortgage.

While plenty of people are still happy where they are, the number of rate-locked homeowners is starting to ease as rates moderate. Life changes—job moves, family growth, retirement—are increasingly becoming the bigger driver for moving, and that’s opening up more inventory.

Data from Realtor.com shows just how much the number of homes for sale has grown:

(Note: Insert graph showing the growth of homes for sale, highlighting the approach to pre-2019 levels.)

The really interesting takeaway here is that the market is approaching inventory levels that haven’t been seen for the past six years. That return to a more normal inventory is great news for everyone. It gives buyers more choices than they’ve had in years and helps bring the market closer to balance.

3. More Buyers Are Re-Entering the Market

It’s not just sellers making moves. With more options and slightly better affordability, buyers are getting back in the game, too.

The Mortgage Bankers Association (MBA) reports that purchase applications are up compared to last year. This is a clear, early signal that demand is building again.

(Note: Insert graph showing the rise in purchase applications.)

And experts believe this momentum will continue. Economists from Fannie Mae, the MBA, and the National Association of Realtors (NAR) all forecast moderate sales growth going into 2026.

The Takeaway

This recovery won’t happen overnight. It’s not a dramatic flood of activity that will send prices soaring instantly.

But what we are seeing is the start of steady, sustainable improvement going into 2026. And for buyers and sellers who have been patiently waiting on the sidelines for the market to move, that's the best news they could ask for.