2026 Housing Market: Redfin Predicts "The Great Reset"
Lower mortgage rates, slower price growth, refinance boom, and AI-powered home search. Here are Redfin's 6 predictions that will shape the 2026 housing market.
📊 Redfin's 6 Key Predictions for 2026
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What Is the "Great Housing Reset"?
According to Redfin economists Chen Zhao and Daryl Fairweather, the US housing market is entering a new phase they call "The Great Housing Reset."
This isn't a crash or a recession. Instead, it's a gradual normalization where:
- Affordability slowly improves as wages outpace home prices
- More buyers enter the market as rates tick lower
- The "rate lock" effect weakens as more homeowners accept current rates
- Inventory gradually increases from historic lows
💡 Key Insight
"The Great Housing Reset will take shape in 2026. It won't be a quick price correction, and it won't be a recession. It will be a yearslong period of improving affordability." — Redfin Economists
Prediction #1: Mortgage Rates Will Tick Lower
Redfin predicts the 30-year fixed mortgage rate will average 6.3% in 2026, down from 6.6% in 2025. That's a modest improvement, but every 0.1% matters.
💰 What 0.3% Lower Rates Mean for You
On a $400,000 loan:
- • At 6.6%: $2,560/month payment
- • At 6.3%: $2,479/month payment
- • Monthly savings: $81
- • Annual savings: $972
- • 30-year savings: $29,160
However, don't expect rates to stay below 6% for long. "Lingering inflation risk" and a resilient economy will keep the Fed from cutting rates aggressively.
Compare today's rates from 50+ lenders to see what you qualify for.
Prediction #2: A Massive Refinance Boom Is Coming
Redfin expects refinance volume to surge 30% year-over-year to a total of $670 billion in 2026. This is driven by:
- 20% of homeowners currently have rates above 6%
- Many bought in 2022-2024 at peak rates (7%+)
- Even a small rate drop makes refinancing worthwhile
📊 Should YOU Refinance?
Use the 0.75% rule: Refinance if you can drop your rate by at least 0.75%
- • Current rate: 7.0%+
- • Plan to stay 5+ years
- • Good credit (700+)
- • Sufficient equity (20%+)
- • Current rate: 6.5% or lower
- • Moving in 2-3 years
- • Credit needs work
- • Low equity (<10%)
Check your refinance rates in 2 minutes — no commitment required.
Prediction #3: Home Price Growth Will Slow
Home prices will continue to rise, but at a much slower pace. Redfin forecasts prices increasing just 1% in 2026, compared to 2% in 2025.
Meanwhile, wages are expected to grow 4%. This means:
📈 Affordability Math
For the first time since the 2008 financial crisis, home prices will grow slower than wages for a sustained period. This gradually improves affordability without a crash.
Some overheated markets (Florida, Texas, Arizona) may even see small price declines as inventory increases.
Prediction #4: Homebuying Activity Will Pick Up
Redfin projects 4.2 million existing homes will sell in 2026, up from 4.1 million in 2025. While still historically low, this represents a thawing of the frozen market.
Factors driving increased activity:
- Lower mortgage rates attracting fence-sitters
- Improved affordability (wages > prices)
- More inventory as "rate-locked" sellers accept reality
- Pent-up demand from 2023-2025 buyers
🎯 Best Time to Buy in 2026?
Historically, January-February offer the least competition and most motivated sellers. Late spring brings more inventory but also more buyers. Consider getting pre-approved now to be ready. Get pre-approved today.
Prediction #5: More Roommates, Fewer Babies
Affordability challenges will continue to reshape how Americans live:
- 6% of Americans moved in with parents due to housing costs
- 6% moved in with roommates to share expenses
- Friends pooling resources to buy homes together (with "prenup-style" agreements)
- Fertility rates continuing to decline as families delay or forgo children
Homeownership rates among Gen Z and millennials are expected to remain flat in 2026.
Prediction #6: AI Will Transform Home Search
Artificial intelligence is becoming a "matchmaker" for house hunters. Instead of traditional geographic searches, buyers will:
- Have conversational searches with AI assistants
- Get personalized recommendations based on budget, lifestyle, commute
- Receive instant property analysis including hidden costs, neighborhood data
- Use AI-powered negotiation tools to make competitive offers
🤖 The Future of Home Search
"Instead of a typical geographic search, homebuyers will search for precisely what they want and have a back-and-forth conversation with search sites, giving feedback to tailor their search results." — Redfin
What This Means for You: Action Plan
🎯 Your 2026 Housing Strategy
If You're Buying:
- • Get pre-approved NOW to know your budget
- • Don't wait for "perfect" rates — they may not come
- • Consider buying in Q1 2026 for less competition
- • You can always refinance later if rates drop
If You're Refinancing:
- • If your rate is 7%+, consider refinancing now
- • If your rate is 6.5-7%, wait for rates to hit low-6%
- • If your rate is below 6%, you're golden — don't touch it
If You're Selling:
- • Price realistically — buyers have more options
- • Spring 2026 will bring more buyers
- • Consider offering rate buydowns to attract buyers
Frequently Asked Questions
Will the housing market crash in 2026?
No, experts don't predict a crash. Redfin forecasts a "reset" with home prices growing just 1% (vs 2% in 2025). This is a gradual cooling, not a crash. Low inventory and strong employment support prices.
What will mortgage rates be in 2026?
Redfin predicts 30-year rates averaging 6.3% in 2026, down from 6.6% in 2025. Rates may dip below 6% occasionally but won't stay there. Fannie Mae and MBA have similar forecasts.
Is 2026 a good time to buy a house?
2026 could be better than 2025 for buyers. Lower rates, slower price growth, and more inventory are expected. However, don't wait for "perfect" conditions — they rarely come. If you find an affordable home, buy it.
Will home prices drop in 2026?
Prices won't drop nationally but will grow slower (1% vs 2% in 2025). Some overheated markets may see small declines. Wages growing 4% while prices grow 1% means improved affordability over time.
Should I refinance in 2026?
If your rate is above 6.5%, refinancing in 2026 could save money. Redfin predicts a 30% surge in refinance volume ($670 billion). About 20% of homeowners have rates above 6% and could benefit.
🚀 Get Ready for 2026
The housing reset is coming. Position yourself now with a pre-approval to be ready when the right opportunity appears.