Matthew Gardner, chief economist at Gardner Economics, shared his insights into the 2026 real estate market, forecasting a period of increased clarity and moderate growth. After a couple of years marked by remarkably low sales volumes, Gardner anticipates a rebound driven by rising inventory, more realistic seller expectations, and the return of "fence-sitters" to the market.
Key Takeaways
- Increased Sales Volume: Expect a "decent but not huge jump" in sales compared to 2025.
- Price Normalization: While not a surge, prices are expected to see modest national growth, varying by region.
- Mortgage Rates: Gardner predicts rates could dip slightly below 6% by Q4 2026.
- Market Clarity: The market will offer more certainty for both buyers and sellers.
Driving Factors for Increased Sales
Gardner attributes the anticipated rise in sales to several factors. Firstly, he expects inventory levels to increase, providing more choices for potential buyers. More significantly, he believes sellers will become more realistic about their home values, leading to lower asking prices. This, combined with buyers who have been waiting for the market to stabilize, should invigorate transaction volumes. He specifically mentions "fence-sitters" – those who were hoping for a market collapse – are now realizing that’s unlikely and are preparing to enter the market.
Price Trends and Affordability
While the industry generally agrees that prices will hold rather than surge, Gardner cautions against describing 2026 as a perfectly "balanced" market. Affordability will remain a significant issue in many areas. However, he does foresee modest national price growth, supported by increasing confidence, slightly lower borrowing costs, and improving affordability in certain regions. He anticipates stronger gains in the Midwest, modest increases in the Northeast and South, and a modest positive turn for prices in the West after declines in 2025. For affordability to truly normalize, Gardner suggests it will take several years of incomes rising faster than home prices.
Mortgage Rate Projections
Gardner’s forecast for mortgage rates is on the lower end of industry predictions, with a target of 5.9% by the fourth quarter of 2026. This outlook is based on the expectation that the spread between ten-year Treasury yields and mortgage rates will narrow back towards historical averages, even if bond yields remain relatively stable. He notes that significantly lower rates (in the mid- to low-fives) would likely signal a recession, which he does not foresee. He also sees little reason for rates to move substantially higher, unless there’s a significant loss of faith in U.S. debt.
A Year of Clarity
When asked to summarize the 2026 housing market in one word, Gardner chose "clarity." He believes the market will be less opaque than in the post-COVID years, which were marked by uncertainty regarding plummeting and then skyrocketing rates. This clarity, he argues, will empower both buyers and sellers to make more confident decisions, leading to the anticipated rise in prices and transactions, albeit not at the levels some might desire. He emphasizes that for most people, buying a home is the largest financial decision they will make, and clarity is crucial for that process.