After several years of volatility, 2026 is shaping up to be a year of adjustment..
National forecasts point to improving affordability, rising inventory, and renewed buyer activity without dramatic price drops or rate collapses many have been waiting for, which means the housing market isn’t resetting overnight.
Chief Economist Danielle Hale states “2026 should offer a welcome, if modest, step toward a healthier housing market.”
In this blog we’ll cover what the data actually says and what it means for buyers, sellers, and investors heading into 2026.
Affordability Should Improve Slowly
According to the Realtor.com 2026 Housing Forecast, home prices are expected to rise modestly, about 2.2% year over year. However, when adjusted for inflation, prices are projected to decline slightly for the second consecutive year.
Mortgage rates are also expected to ease. Realtor.com projects the average 30-year fixed rate to settle around 6.3%.
This isn’t a return to ultra-cheap money, but it does reduce pressure on monthly budgets, especially for move-up buyers and investors with solid income streams.
Inventory Is Rising and That Matters More Than Rates Alone
One of the most important shifts heading into 2026 is supply.
The Realtor.com 2026 Housing Forecast Report predicts
- Existing home inventory to increase by 8.9%
- New single-family construction to rise by 3.1%
More inventory doesn’t necessarily mean lower prices, but it does mean more choice, longer decision windows, and less desperation bidding.
That’s a meaningful change after several years of constrained supply.
For markets like the Smoky Mountains, where location, condition, and rental performance matter more than sheer volume, this puts greater emphasis on pricing correctly and presenting properties well.
Sales Activity Is Predicted to Rebound
Lawrence Yun, chief economist at the National Association of REALTORS®, is forecasting a 14% nationwide increase with home sales for 2026, following 2025’s stagnating levels. New-home sales are also projected to rise 5% next year.
Yun also notes the path to a 2026 rebound won’t look the same across the market, because today’s housing market remains deeply uneven.
“The upper end of the market has been doing much better than the lower end,” Yun said, with robust inventory and strong financial markets fueling activity. Sales in the $750,000 to $1 million price range have seen some of the largest gains. Meanwhile, inventory remains constrained at lower price points.
Importantly, NAR does not expect rising sales to destabilize prices. Yun projects home values to increase about 4% nationally, citing continued supply shortages and strong homeowner equity positions.
Price Reductions Are Back
As days on market increase, sellers are once again adjusting prices to meet reality.
Yun said. “Homes that sit on the market for long … will need to reduce the price to attract buyers.”
NAR data shows average price reductions increasing with time on market:
- 0–14 days: ~4.9%
- 31–60 days: ~7.3%
- 90–120 days: ~10.6%
- 120+ days: ~13.8%
This reinforces what we’re already seeing locally: pricing correctly from the start matters more than ever. Overpriced listings sit. Well-positioned ones still move.
What This Means Going Into 2026
2026 will be about balance.
- Buyers gain slightly more leverage and breathing room
- Sellers need to price and prepare thoughtfully
- Investors should focus on fundamentals