2026 Housing Forecast

Recent statistics released by Realtor.com offer an encouraging forecast for this coming year.  A slight decline in mortgage rates, are projected to ease affordability issues slightly, even while home prices continue to rise by about 2%.  Spokane’s median sales price dropped slightly at the beginning of the last quarter, but is now rising by about 1% per month.  Projected sales growth for Spokane is a little over 8%, while price increases are expected to shrink.   Statistics averaged across the nation, showed that existing home sales for 2025 reached a 30 year low, but are projected to show a meaningful gain in this coming year.  For-Sale inventory is on the rise and should make gains toward a total recovery.

What that means for homebuyers and sellers is a shift towards a more balanced market where price growth slows, better interest rates offers buyers some relief, and negotiating power starts to tilt subtly towards the buyer’s side.  Even with this projected positive change, existing-home sales will probably remain well below normal because financing costs and high prices continue to hold back demand.

Many homeowners find that their low interest rates from a by-gone era have left them with a compelling reason to stay put instead of upwards or sideways moves.  Recent data showed that 4 out of every 5 homeowners have a mortgage rate below 6%.  That probably means turnover will be limited with moves unless spurred by necessity.

Nationally, home prices are expected to continue to climb in 2026, adding about 2% for the typical home sold. However, inflation is expected to outpace these gains and that means real (inflation- adjusted) home prices will decline slightly for a second consecutive year.  This dynamic gradually improves affordability, even if that shift goes undetected by most buyers and sellers.  Simply put, even though the sticker price of homes keeps going up, the overall price level and incomes rising means it takes a smaller chunk of each paycheck to buy a home. In other words, affordability (the new fashionable political by-word) should increase modestly in 2026. 

Rising incomes, which should outpace inflation, give buyers more purchasing power, shrinking that portion of a paycheck that has to go toward the mortgage.  The monthly payment to buy a typical home is expected to slip to 29.3% of median income, it’s first year below the 30% affordability threshold since 2022.  In all, there is an important shift toward better conditions for homebuyers.