U.S. Real Estate Market Outlook: What Lies Ahead for 2025–2026

The U.S. real estate market, after years of volatility post-pandemic, stands at a crossroads heading into 2025–2026. As industry analysts and economists offer projections for the next two years, a mix of macroeconomic forces and geopolitical decisions cast a long shadow over the anticipated growth trajectory. Here’s a comprehensive breakdown of where the market is heading—and what factors could disrupt even the most well-founded predictions.

📈 Market Projections for 2025–2026

Home Prices: Modest Yet Positive Growth

According to Zillow, national home prices are projected to rise a modest 0.8% between February 2025 and February 2026—downgraded from earlier forecasts (Fast Company). On the more optimistic end, Capital Economics forecasts annual price growth of 4%, potentially elevating the national median home price to approximately $455,000 by 2026 (Business Insider).

The National Association of REALTORS® (NAR) is more conservative, anticipating price increases around 2% per year over the same period (Bankrate).

Mortgage Rates and Affordability Pressures

Despite hopes of monetary easing, 30-year mortgage rates are expected to remain above 6%–7% through 2025, potentially dipping to 6% by the close of 2026 (Business Insider). High rates continue to hamper affordability, with home prices still over 50% above pre-pandemic levels (Reuters).

Sales Volume Outlook

NAR forecasts existing-home sales to reach 4.3 million units in 2025, reflecting a persistent underperformance compared to the pre-COVID norm (Norada Real Estate).

🕰️ Historical Comparisons: 2019–2024

• In June 2024, the median price for single-family homes hit a record $426,900 (FRED).

• Home prices rose 5.2% year-over-year in December 2024, a steep decline from the 17.7% YOY peak in September 2021 (CEIC Data).

• Mortgage rates surged from around 3% in 2020 to 7% by 2024, drastically reducing purchasing power.

• First-time homebuyers now represent a smaller share of the market, and the median buyer age has climbed to 49 years (Reuters).

  
  

🧮 Key Disruptive Factors That Could Alter Forecasts

1. Fiscal Policy & Tariffs

The Trump administration’s newly reinstated tariffs—10% on all imports, with steeper rates for select countries—could raise construction costs for steel, lumber, and wiring components. This increase would not only curtail new housing supply but also boost prices for existing properties (Infobae).

Stricter immigration controls could also reduce available labor in the construction sector, exacerbating the already severe housing shortage (Telemundo).

2. Monetary Policy & Interest Rates

Long-term mortgage rates are closely tied to 10-year Treasury yields. With inflation concerns and growing deficits, bond yields may rise—taking mortgage rates with them. While the Federal Reserve’s benchmark rate remains between 4.25% and 4.50%, future cuts appear unlikely in the near term due to persistent inflationary pressures (Fynsa).

Goldman Sachs and the Mortgage Bankers Association both suggest mortgage rates are unlikely to fall below 6% until at least late 2026 (El País).

3. Economic Confidence and Market Liquidity

Rising bond yields, unstable equity markets, and global trade tensions are likely to impact consumer sentiment, which remains a critical driver of real estate demand. Weakening buyer confidence may further depress market activity—even as prices stabilize (El País).

🌐 Regional Bright Spots

While national growth appears tepid, several metro areas project above-average appreciation:

• Atlantic City, NJ: +5.1%

• Knoxville, TN: +4.7%

• Kingston, NY: +4.7%

• Torrington, CT: +4.6%

• Bangor, ME: +4.6%(Source: Zillow via Fast Company)

  
  

These markets benefit from affordability relative to larger metros and increased migration from urban cores.

The U.S. housing market in 2025–2026 is expected to grow at a restrained pace, shaped by lingering inflation, persistent affordability challenges, and a new wave of fiscal and trade policies. Yet within this uncertain terrain lie regional opportunities and potential shifts that could reshape the landscape altogether.

Investors and buyers alike must keep a watchful eye on interest rate trends, global trade dynamics, and domestic policy maneuvers in order to navigate this evolving market landscape.

Author: Carlos Calderon, CEO of Signature International Real Estate