Is 2026 the Year to Buy a Home?

Americans were on the fence about buying a home in 2025 due to three factors:

• Low mortgage rates on their existing homes. Some 88.5% of current homeowners are holding mortgages with rates lower than 6%, which makes taking on a new higher-rate mortgage unattractive.
• Waiting for mortgage rates to decline. Mortgage rates began 2025 around 7%. As of today, the 30-year fixed-rate mortgage is averaging 6.15%.

• Waiting for home prices to drop. In January of last year, the median sales price of a home in the U.S. was $418,600. The most recent stats show that the price has dropped to an average of $415,000.

Those three factors have resulted in a lull in home sales, although sales have picked up a bit since August, as mortgage rates began to decline.

What Does All This Mean for 2026 Homebuyers?

Most housing experts agree that the housing environment should improve somewhat for buyers this year due to:

• Increasing inventory. Realtor.com reports that housing inventory rose for the 25th straight month (+12.6% YoY) in November. However, since the market slowed and prices contracted in 2025, many sellers have decided to pull their listings—38% in October, year over year, which means inventory gains may begin to moderate.
• Declining mortgage rates. Most experts predict that mortgage rates will continue to decline a bit throughout 2026, perhaps ending the year in the high-5% range.
• Moderate price increases, in the 1%-4% range.

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If you are in the market for a home right now, you’ll need to calculate if it’s more costly to wait—as home prices increase while mortgage rates decline—or if now is as good as it gets for the near future.

Let’s look at a couple of examples (assuming a 20% down payment):

Today’s mortgage rate: 6.15%
Today’s median home price: $415,000
Monthly payment: $2,439 (including principal, interest, taxes and insurance)

Possible mortgage rate at the end of 2026: 5.9%
Possible median home price: $423,300 (using a 2% potential price increase)
Monthly payment: $2,354

So, you may save $85 a month if you wait. Over 30 years, that can add up to thousands of dollars, $30,600 in this example, just using simple math.

Is It Worth It to Wait?

That will depend on you and your family’s needs:

• Do you rent now? What are the chances of your rent escalating? Currently, the average rent in the U.S. is $2,000 per month.
• How stable is your employment? You’ll need at least two years in your current job to apply for most mortgages.
• Can you afford to buy? Most lenders calculate two ratios for buyers: 1) Your monthly payment should be no more than 28% of your gross monthly income; and 2) All of your monthly payments (including the new mortgage) should be no more than 36% of your monthly gross income. Of course, these ratios may change if you are borrowing using an FHA, VA, or first-time buyer loan.
• Watch for incentives. Some builders will offer incentives; so will home sellers, who may pay your closing costs or Realtor fees.
• You may consider using an adjustable-rate mortgage (ARM). Today, ARM rates range from mid-5%-6%, and terms are much better than they used to be, some offering rate adjustments as long as 10 years.

An Investment Alternative

As a longtime participant in the real estate industry—as a buyer of numerous properties, real estate agent, broker, and instructor—I can tell you that for most people, housing (unless you are an investor) is not great as a short-term investment. Of course, over time, it’s wonderful to own a home, free and clear, when you retire. But, if you are looking for purely real estate investment gains, you may want to consider investing in a Real Estate Investment Trust (REIT). There are more than 150 REITs currently trading on the NYSE.

REIT investing is very attractive due to its attractive dividend yields (currently 4%-6%), as REITs are required to pay out 90% of their income to their unitholders.

Not every REIT is attractive in every economic cycle. For instance, last year, all-equity REITs averaged a 2.3% return. Yet, mortgage REIT holders gained an average of 12.1%.

But I think mortgage REITs still look attractive, particularly these three:

Good luck in your house-hunting and your REIT investing, and best wishes for a healthy, happy, and prosperous 2026!

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