Home prices are poised to dip in 22 U.S. cities in 2026, a new analysis says. See where.
As the U.S. housing market continues its complex dance between high demand, persistent inventory shortages, and elevated interest rates, a glimmer of change is on the horizon for prospective homebuyers. While 2025 has seen homes stubbornly hold near record values and mortgage rates hover uncomfortably above 6%, a new analysis from Realtor.com paints a more optimistic picture for 2026, forecasting a notable shift toward a more "buyer-friendly" environment. This includes an anticipated dip in property prices in 22 of the largest 100 U.S. cities, coupled with a slight easing of mortgage rates, offering a much-needed reprieve for those struggling to gain a foothold in homeownership.
This forecast suggests that 2026 could mark the most "balanced housing market" witnessed since the onset of the pandemic. This equilibrium implies a period where neither sellers nor buyers hold a definitive upper hand in negotiations, fostering a healthier and potentially less frenzied transactional landscape. Jake Krimmel, a senior economist at Realtor.com, emphasizes this shift, stating that the market is expected to "show a lot of signs of getting back on track to what we consider to be normal." This return to normalcy, after several years of unprecedented volatility, could signal a more predictable and less stressful experience for all participants.
A key driver behind this projected shift is the anticipated moderation in mortgage rates. Realtor.com predicts that average mortgage rates will decline to 6.3% next year, a welcome decrease from the estimated 6.6% average seen in 2025. While this reduction may appear modest, even a slight drop in borrowing costs can significantly impact affordability and monthly payments, effectively widening the pool of eligible buyers. Lower interest rates, combined with robust wage growth projected for the coming year, are expected to infuse new life into the market, encouraging more individuals and families who have been sidelined by high costs to actively pursue homeownership.
The cumulative effect of these factors – easing mortgage rates and stronger wages – is expected to translate into a slight, yet meaningful, uptick in existing-home sales. Realtor.com’s report projects an increase of just under 2%, pushing sales to 4.13 million properties in 2026, up from an estimated 4.07 million in 2025. While seemingly a marginal gain, this represents a significant deviation from the relative flatness that characterized transactions throughout 2025. It suggests renewed momentum and a thawing of the market, which has been largely stagnant due to a standoff between sellers reluctant to give up low mortgage rates and buyers struggling with affordability.
Where Will Prices Dip? A Regional Breakdown
The analysis reveals that the majority of the 22 cities where home prices are forecast to decline are concentrated in specific regions, primarily the Southeast and the West. This geographical pattern suggests underlying economic and market dynamics unique to these areas. Florida, in particular, stands out, with seven out of its eight largest metropolitan areas projected to experience price reductions. The lone exception within the Sunshine State is Miami, which is expected to maintain its upward trajectory, possibly due to its status as a global financial hub and its continued appeal to high-net-worth individuals and international investors.
The most substantial price drops are anticipated in Florida, indicating a potential market correction after a period of rapid growth. The Cape Coral-Fort Myers metropolitan area is projected to lead the nation with a significant 10.2% decline in home values. Following closely is the North Port-Sarasota-Bradenton region, also in Florida, with an expected 8.9% decrease. These areas, alongside others in the Southeast and West, experienced explosive growth during the pandemic-era real estate boom, fueled by historically low mortgage rates, a widespread shift to remote work policies, and an influx of buyers seeking more space and warmer climates.
According to Jake Krimmel, the projected declines in these cities can be attributed to a combination of factors. Crucially, inventory levels have expanded in these areas, offering buyers a wider selection of homes. This increase in supply naturally exerts downward pressure on prices, especially when coupled with a moderation in demand. "These places, among others, saw a huge frenzy during the pandemic, so part of what we are projecting is that demand continuing to come back down to earth," Krimmel explained to CBS News. The intense competition and bidding wars that defined the pandemic boom are gradually receding, allowing the market to recalibrate to more sustainable levels. The surge in population during the pandemic in these regions led to increased new construction, which is now contributing to the expanded inventory, further balancing the supply-demand equation.
Beyond the specific examples, the general characteristics of cities expected to see price dips often include a higher proportion of new construction, a previous period of unsustainable price appreciation, and potentially a greater sensitivity to interest rate fluctuations. Many of these markets became less affordable for local residents as prices soared, pushing demand further out or leading to a cooling-off period as potential buyers were priced out.
The Remaining 78 Cities: Modest Gains and Stability
While 22 cities are bracing for price reductions, the forecast indicates that home prices are still expected to rise in the other 78 largest U.S. cities. However, these increases are largely predicted to be modest, with a median price gain of 4% across these locations. This suggests a broad market stabilization rather than a widespread surge, reinforcing the theme of a more balanced environment.
Cities that continue to see price appreciation are likely to share certain characteristics: robust job markets, ongoing population growth, and, critically, a more constrained housing supply. These are often established economic hubs or areas with highly desirable amenities where demand consistently outstrips the available inventory. Even in these markets, the projected 4% median gain is a far cry from the double-digit appreciation witnessed during the peak of the pandemic boom, signaling a return to more typical, single-digit growth rates that are more aligned with historical averages and general economic inflation.
Realtor.com’s Methodology: A Comprehensive Approach
To arrive at its detailed projections, Realtor.com employed a comprehensive methodology, meticulously examining a range of critical factors across the 100 largest U.S. cities. These factors provide a holistic view of market health and future trajectory:
- Inventory: The sheer number of homes available for sale is a fundamental indicator of market balance. Higher inventory levels typically favor buyers, while low inventory creates a seller’s market.
- New Construction: The pipeline of new homes being built is crucial for addressing supply shortages and influencing future inventory levels. Robust new construction can alleviate price pressures.
- Price Growth: Historical and recent price trends offer insights into market momentum and whether an area is overheated or undervalued.
- Wage and Job Growth: A strong local economy, characterized by rising wages and job creation, supports housing demand and affordability. When people earn more, they can afford more, stimulating the market.
- Unemployment: Low unemployment rates signal a healthy economy and financial stability for residents, which are essential for sustained housing demand.
By integrating these diverse economic and real estate indicators, Realtor.com aims to provide a nuanced and data-driven forecast that accounts for both national trends and localized market specificities.
Implications for Buyers and Sellers
For prospective homebuyers, this forecast offers a cautiously optimistic outlook. The combination of slightly lower mortgage rates and the possibility of price dips in certain markets could open up new opportunities for affordability. Buyers in the 22 identified cities might find themselves with greater negotiating power, potentially securing homes at more favorable prices. Even in areas where prices are still rising, the projected modest gains mean less aggressive competition and more time to make informed decisions. However, buyers should remain diligent, conduct thorough research on local market conditions, and work with experienced real estate agents to navigate these shifts effectively. Getting pre-approved for a mortgage remains a crucial first step to understand one’s true purchasing power.
Sellers, particularly in the markets projected for price declines, may need to adjust their expectations. The days of multiple offers above asking price and waived contingencies could be drawing to a close. A more balanced market means pricing homes competitively from the outset will be paramount, and sellers may need to be more open to negotiations and potentially invest in minor improvements to make their properties stand out. For sellers in the 78 cities expecting modest gains, the market will likely remain favorable, but perhaps without the extreme windfalls seen in recent years.
Broader Economic Context and Caveats
The housing market does not operate in a vacuum; it is intricately linked to the broader economic landscape. The projected easing of mortgage rates is often tied to expectations of moderating inflation and a potentially more dovish stance from the Federal Reserve. Strong wage growth, if it outpaces inflation, would further enhance purchasing power. However, any unexpected economic shifts—such as a deeper-than-anticipated recession, a resurgence of inflation leading to higher interest rates, or unforeseen geopolitical events—could alter these forecasts. Supply chain issues impacting new construction, or changes in regulatory policy, could also introduce variables not fully captured in current models.
Ultimately, the Realtor.com analysis points towards a recalibration of the U.S. housing market in 2026. After years of unprecedented highs and intense competition, the prospect of a more balanced, "normal" market where price appreciation is sustainable and affordability incrementally improves offers a hopeful vision. While not every city will see prices fall, the widespread moderation in growth rates and the specific declines in key markets signal a significant shift, creating a landscape that is both more accessible for buyers and more stable for the overall economy.
