As we kick off 2026, the U.S. housing market is showing signs of a tentative reset after years of pandemic-fueled frenzy and Biden-era economic turbulence. Two fresh reports—one forward-looking from Redfin, the other a rearview snapshot from the National Association of Home Builders (NAHB)—paint a picture of moderating prices, sluggish sales, and regional disparities. But beneath the numbers lurks a familiar culprit: excessive government meddling in everything from zoning to interest rates, stifling supply and affordability for everyday Americans.
Start with Redfin's crystal ball for 2026, which dubs this the "Great Housing Reset."
The brokerage forecasts median home-sale prices inching up just 1% year-over-year, the slowest growth since the Great Recession. That's a welcome breather after the double-digit surges that priced out millennials and Gen Z. Wages are finally poised to outpace home-price and mortgage-payment growth, potentially easing the crunch for young families who've resorted to multigenerational living or delayed kids. Existing-home sales? A modest 3% bump to 4.2 million annualized, fueled by a perkier spring season. Mortgage rates should average 6.3%—down from 6.6% in 2025—dipping below 6% at times, thanks to the Federal Reserve's grudging rate cuts. Refinancing could surge 30% to $670 billion as homeowners escape higher legacy rates.
Yet Redfin warns of persistent headwinds. Inventory remains tight as equity-rich sellers sit tight, and rents are set to climb 2-3%, matching inflation amid slumping apartment construction. Hot spots like New York City suburbs and Great Lakes metros (Cleveland, Minneapolis) could see gains from hybrid work trends, while coastal Florida and Texas hubs like Austin cool off due to insurance hikes and disaster risks. Climate-driven "hyperlocal" migration—folks fleeing flood-prone blocks but staying in the same city—highlights how environmental policies add another layer of uncertainty.
Contrast this with NAHB's dive into third-quarter 2025 data, based on the Federal Housing Finance Agency's House Price Index.
Nationally, prices rose a tepid 3.3% year-over-year—the weakest since 2013—signaling the post-COVID boom's fizzle. Cumulatively since early 2020, values are up 54.9%, but over half of metros have dipped from peaks, some by double digits. The top appreciators? Rust Belt and Southern gems like Knoxville, Tennessee (88.4%), and Atlantic City, New Jersey (88.3%), where perhaps lighter regulatory burdens let markets breathe. The laggards: Oil-patch towns in Louisiana and Texas, plus pricey California metros like San Francisco (23.3%), hammered by high costs and exodus.
What's the throughline? Decades of NIMBY zoning laws, green mandates, and federal overreach have choked new construction, inflating bubbles that now deflate unevenly. Redfin nods to YIMBY reforms and manufactured housing as fixes, but real progress demands slashing red tape—think easing permitting, ditching density caps, and letting builders respond to demand without Washington’s thumb on the scale. The Fed's rate rollercoaster, born of inflationary spending sprees, hasn't helped; lower rates ahead could unlock sales, but only if policymakers step back.
2026 offers cautious optimism: affordability ticking up, sales stabilizing. But without unleashing free-market forces, this "reset" risks becoming a prolonged stall. Families deserve better than government-engineered scarcity. Trumps plan? Let's build our way out. He aims to build 12 million homes in 10 years, making housing "attainable for young families." Trump’s push mirrors the G.I. Bill (1944), which fueled a housing explosion by offering low-interest, no-down-payment loans to veterans. The policy doubled homeownership rates and built the modern middle class—a model Trump aims to replicate.
For more on the real estate market from the #1 team in the MLS for both dollar volume and number of transactions see our interview with Bernie Gallerani Ep 413. This is not an offer to buy or sell real estate. Consult a trusted advisor before making any economic decision.
