January 6, 2026 – Happy New Year Predictions For 2026

Economic Commentary

The new year has started, and the predictions have hit the press, or more accurately, hit the Internet. What are the expectations for the real estate markets in 2026?  Let’s break it down to a few segments:

• Mortgage Rates. Every prediction we have reviewed has mortgage rates falling in the coming year, but very slightly. For example, the National Association of Realtors, First American Corporation and Zillow see rates remaining just over 6.0% and Fannie Mae expects the average rate to end the year at 5.9%. Predictions for a greater trend of refinancing accompanies these projections.
• Housing Prices. The predictions here are just as homogenous. Prices are expected to rise slightly in the 1% to 2.5% range. We did not see many predictions at all for falling home prices.
• Real Estate Sales. Again, the predictions are for an increase, but very slight from 2025—in the range of 2% to 5% increase. It is expected that slightly fewer new homes will be built, thus the expansion is expected to come from the existing home side. Meanwhile, inventory is expected to increase and thus the movement towards a buyer’s market will continue.

It seems to us that these predictions are overly conservative. They all see improvements, but not much movement. Perhaps the prognosticators are jaded because of the lackluster results of 2025. Regardless of the reasons, we always warn our readers to take these guesses with a grain of salt. For example, mortgage rates are ending the year pretty close to 6.0%.  If they are going to fall, it is reasonable to believe that they will be at least in the high 5.0% range in 2026. Of course, don’t overlook the phrase “if they fall” when we relate this obvious scenario.  Because predictions are just guesses, after all.  Happy New Year!

Weekly Interest Rate Overview

The Markets. Mortgage rates ended the year at their lowest level of 2025. According to the Freddie Mac weekly survey, 30-year fixed rates fell to 6.15% last week from 6.18% the previous week. In addition, 15-year loans decreased to 5.44%. A year ago, 30-year fixed rates averaged 6.91%, 0.76% higher than today. Attributed to Freddie Mac: “After starting the year close to 7%, the average 30-year fixed-rate mortgage moved to its lowest level in 2025 this week, an encouraging sign for potential homebuyers heading into the new year.”  Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

According to Senior Economist Jake Krimmel of Realtor.com, refinancing might not be beneficial for the majority of homeowners who intend to relocate soon. Knowing whether a move passes a rule known as the “breakeven point,” which examines whether upfront expenditures are outweighed by the savings from a lower rate, is crucial to refinancing, he said. “Loan size, remaining term, and, most importantly, how long the borrower plans to stay in their home all matter,” Krimmel said, noting that “a rule of thumb is closing costs divided by monthly savings.” Even though the Federal Reserve lowered interest rates for the third time in a row, this does not guarantee a decrease in mortgage rates. Rates closely follow the yield on the 10-year Treasury but are not directly impacted by the Fed’s interest rate decisions.  Economists anticipate a minor decline in mortgage rates, with rates expected to linger around 6.3% next year, despite regulators’ indication that there might only be one rate cut in the upcoming year as rates approach a neutral level.  Homeowners must still pay closing costs on the new loan when refinancing, so it’s crucial that the savings from lower monthly payments eventually exceed those expenses, according to Krimmel. According to Krimmel, refinancing only makes sense when the new mortgage rate is between 0.5 and 1 percentage point lower than the homeowner’s current rate because it gives sufficient savings to cover the refinancing charges.  Those who purchased homes within the last two to three years, when interest rates were between 7% and 8%, would stand to gain the most. They could be more than 1% “in the money,” making refinancing appealing, even with a slight decline in market rates. However, refinancing savings would be more important because these borrowers typically have big loan amounts and want to remain in their houses for at least five more years.  Source: MP Daily

Mortgage rates have been moderating in recent weeks, and the 30-year fixed-rate mortgage could dip to 6% in 2026, if real estate predictions hold. That would be a notable decrease from the 7% rates seen at the start of 2025—and it could unleash a group of home buyers who had been sidelined in the market. According to National Association of REALTORS® research, a 1% decrease in rates could add about 5.5 million households, including 1.6 million renters, to the pool of potential buyers. “Lower rates will bring more buyers back to the market,” says Nadia Evangelou, senior economist and director of real estate research at NAR. She says hopeful first-time buyers may stand to benefit the most, especially those who’ve been squeezed by rising rents. Also, rate declines could spark confidence among current homeowners, who’ve been locked in with lower rates, to sell and relocate—which would further improve housing inventory. “These relatively lower rates will help both first-time buyers and current homeowners take the next step,” Evangelou says. NAR is forecasting that rates could fall to 6% in 2026. That outlook factors in several influences on rates, including the Federal Reserve’s recent cuts to its short-term interest rates, ongoing inflation trends, the federal deficit and national debt, the impact of tariffs, quantitative tightening and movements in the 10-year Treasury yield. Source: Realtor® Magazine

While economic instability has kept many potential home sellers on the sidelines and unpredictability in mortgage rates continues to play a major role in homeowner decisions, a new TD Bank survey found that 74% of homeowners polled plan to remain in their current home over the next two years, while 58% said their current mortgage is influencing their decision not to sell. TD Bank’s HELOC Trend Watch is a nationwide survey of more than 2,000 homeowners who have purchased a home within the past 10 years using a mortgage. The survey explores how homeowners are building and leveraging equity to help them achieve their long-term financial objectives.  “Engaging with a mortgage professional allows homeowners to gain a more comprehensive understanding of how to utilize their home equity in pursuit of their financial objectives,” said Jon Giles, head of residential lending strategy and support at TD Bank. As prices rise and uncertainty looms in the housing market, home equity has emerged as an essential consideration for many households. Of those who have accessed home equity products, 86% say a home equity line of credit (HELOC) is an important part of their financial safety net, and 70% of all homeowners agree that a HELOC can help them manage expenses and boost financial confidence.  Additionally, 82% of homeowners recognize the advantages of using a HELOC, citing benefits such as flexibility for home repairs, renovations, educational expenses or unforeseen emergencies (59%), lower interest rates relative to many other types of credit (42%), and the opportunity to consolidate higher-interest debt into a single loan (36%).  The process of building home equity is regarded as a long-term, multi-generational financial strategy, with 68% of those surveyed viewing their home as a means of creating generational wealth.  Source: National Mortgage Professional