Laurey Glenn
As we enter a new year amidst economic uncertainty, one of the most common questions is, “what about the housing market?” There is no crystal ball, so predictions and speculations are floating as we enter 2026. Real estate agents across the country are closely watching inflation, interest rates, and housing availability to get a handle on what to tell prospective buyers and sellers.
We talked to three real estate experts who all said that a crash is unlikely. But in each of their markets, localized shifts are afoot. Here’s what to watch out for in 2026.
Related: 6 Must-Know Real Estate Trends for 2026, According to Buyers and Agents
Meet Our Expert
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Mauricio Umansky is a real estate broker and the founder and CEO of The Agency RE, a global real estate brokerage.
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Robert Milton Jr. is a real estate agent and investor at New Jersey-based Milton & Co.
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Jeff Lichtenstein is the CEO and broker at Echo Fine Properties in Palm Beach Gardens, Florida.
Will the Housing Market Crash in 2026?
According to Zillow’s Home Value Index, the New York City housing market is seeing a 3% value increase over the past calendar year—well over the national value at +.1%. With typical home values around $806,834 and 21.8% of sales closing over list price, the Big Apple’s market is one of the most volatile in the country.
Mauricio Umansky, of The Agency, a global luxury real estate agency, has a finger on the pulse of the city that never sleeps. “I don’t foresee a housing market crash in 2026,” he says. “While affordability remains a challenge, the Fed’s expected rate cuts should provide some relief for buyers and stimulate activity across many markets. Inventory levels are gradually improving, too, signaling a healthier, more balanced market rather than a downturn.”
Of course, what seems balanced in one market may hint at shaky ground elsewhere, but first-time homebuyer affordability data from the National Association of Realtors (NAR) is a good metric to test just how resilient the market feels to everyday people. Since 2022, the average starter home price for a first-time homebuyer has increased by 8.65% ($28,900), but there was 11% cumulative inflation over the same period. With interest rates dropping, there should be more buyer readiness to pounce on a good deal when it comes up, but it is unclear what these rates mean for sellers.
Inventory and Interest Rates
“If you asked me over the summer about a housing crash, I would have laughed,” said Jeff Lichtenstein, CEO and broker at Echo Fine Properties. He said the very thought was ridiculous just a few months ago—and it probably still is for 2026, because of the shortage of inventory. According to the U.S. Chamber of Commerce, the U.S. housing market is experiencing a severe shortage of 4.7 million homes. That figure won’t diminish so long as homeowners who bought their homes between 2011 and 2021 at low mortgage rates of 3% to 4% choose to stay put.
The wildcard, though, is inflation. Lichtenstein says that the cost of building new homes is rising, due to tariffs and labor shortages. “There already is a 4-5% drop in real value of homes, and inflation between 3-4% means that we are partially seeing maybe a 5% drop in real equity. Inflation hits the poor first and the middle class second over a slower period,” he explains. “All of this means that instead of 6% being the magic number for mortgage rates to get buyers to purchase, it might move that needle to 5%.”
With real equity stagnating and interest rates hovering around 6% for a primary, fixed-term 30-year mortgage, would-be sellers have many reasons to just hold onto their homes. Fewer homes on the market means fewer sales overall. However, Lichtenstein describes a crash as a “real longshot.”
Expect Corrections, Not a Crash
Umansky says he’s seeing inventory levels gradually improve, which is a healthy sign of a more balanced market rather than a downturn. “Lending standards remain strong, demand is steady, and limited supply continues to support home values in most regions. Some overheated markets may see mild corrections, but overall, we’re entering a period of normalization,” he explains.
As Tip O’Neill once said, “All politics is local,” and the same is true for housing markets. Employment and cost of living can play a big part in defining whether normalization equates to affordability. With mass layoffs sweeping major cities like Washington, D.C., Kansas City, and Baltimore, market corrections may be sharper than in other parts of the country.
“The most notable adjustments I anticipate will be in the western and southern markets, where significant migration during the COVID years drove home prices to record highs,” says Robert Milton Jr., a New Jersey-based agent with Milton & Co. “To accommodate that surge, developers rapidly expanded new construction. As population growth and relocation patterns have since slowed, these areas are now seeing an oversupply of homes relative to buyer demand. Consequently, listings are staying on the market longer, and sellers are increasingly reducing prices to attract buyers. This trend will continue in 2026.”
In Milton’s primary market (the northeast), conditions are more stable. “The double-digit home price increases seen in recent years have eased, returning to more typical annual growth rates of around 3–4%.”
He echoes Umansky and Lichtenstein’s thoughts that a broad market crash is unlikely, but many regions will experience moderate price corrections. “As mortgage rates stabilize in the high-5% range, both buyers and sellers are likely to feel more confident reentering the market, leading to an uptick in transaction volume,” Milton says. “This balance should create a neutral market environment where prices remain largely flat, with only modest downward adjustments in select areas.”
Read the original article on Better Homes & Gardens