National home prices are projected to grow about 0.5% in 2026, while housing inventory is expected to increase 5%.
Mortgage rates are forecast to average around 6.4%, while existing-home sales are projected to rise between 4.25% and 5% compared to 2025 levels.
“The market is shifting toward a new era where incomes rise faster than home prices and the deep freeze of the last few years begins to thaw,” Simonsen said. “After years of delay, anyone looking to make a move should finally see greater opportunities to take the leap.”
Affordability gains expected
According to the report, three forces are expected to shape the housing market next year: improved affordability as wages outpace price growth; increased household mobility as pent-up demand is released; and growing differences across regions and price tiers.
While national averages suggest stability, the outlook notes that local market conditions will vary widely.
Parts of the Northeast and Midwest continue to face constrained housing supply, while some Sun Belt states have already experienced price declines tied to higher inventory levels, Simonsen added.
Luxury market riding high
The report also projects continued strength at the high end of the market.
Sales of homes priced above $1 million have outperformed other segments in recent years, supported by wealth gains tied to financial markets. The outlook expects luxury buyers — who are often less sensitive to mortgage rates and are more likely to pay cash — to remain active in 2026.
Compass also emphasized that the housing market continues to emerge from a post-pandemic period marked by limited inventory, high prices and reduced transaction activity.
The firm expects 2026 to represent a transition into a more balanced environment, with higher sales volumes driven by rising wages and increased housing supply rather than price appreciation.
