The 2026 Housing Market: Why a Comeback Is Finally on the Horizon

By Nichole Ehrbar, Your Big Island Agent

After a long stretch of slower movement in 2025, the real estate market is finally showing signs of gearing up for a strong rebound. Early indicators point toward real growth ahead, and 2026 is shaping up to be a year where both buyers and sellers will see more opportunity.

Here’s what that means in simple, real-world terms.

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A Significant Increase in Home Sales Is Expected

Projections point toward a double-digit rise in home sales in 2026, marking a major shift from the flat conditions experienced this year. New construction activity is also expected to pick up.

This renewed movement does not signal falling prices. Home values are anticipated to rise, supported by steady employment levels and a continued shortage of available homes.

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Signs of a Warming Market Are Already Appearing

Even though 2025 has felt slow, several key indicators are pointing in the right direction:

• Mortgage applications are rising compared to last year.

• The job market remains stable, giving buyers more confidence.

• Builders are steadily adding new inventory.

• Delayed transactions from earlier disruptions are moving forward.

These developments are creating a gradual but noticeable build-up of momentum.

Mortgage Rates Expected to Ease in 2026

Mortgage rates began the year near the 7 percent range and have since moved into the mid-6 percent territory. Forecasts suggest they may improve slightly and sit closer to 6 percent in 2026.

Rates are not expected to return to the extremely low levels of the past, but even modest decreases can significantly improve affordability—especially for buyers who stepped back due to cost concerns.

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A Market Divided Between Experienced Buyers and New Buyers

One of the most noticeable challenges right now is the widening gap between buyers who already own a home and those trying to enter the market for the first time.

Repeat buyers—especially those with strong equity positions—continue to drive activity. Many are making large down payments or purchasing with cash, particularly in higher-priced segments.

First-time buyers are facing more obstacles. Rising rents, student loan burdens, childcare costs, and general living expenses make saving for a home difficult. A lack of awareness about available financing options also holds many back.

Increasing education around lending programs and down-payment assistance will be essential for supporting this group.

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More Price Reductions, But Values Remain Stable

With the market slowing earlier in the year, more listings have seen price adjustments. Homes that sit too long without interest often require reductions, and the longer they remain unsold, the deeper those cuts tend to be.

However, these reductions are more about correcting initial overpricing than signaling widespread value declines. Overall price growth is still expected through both 2025 and 2026.

Why the Outlook for 2026 Is Strong

Even with a quieter year behind us, the foundation of the market remains solid:

• Delinquencies and foreclosures remain historically low.

• Homeowners, on average, have significant equity.

• Employment trends remain stable.

• Inventory levels are slowly improving.

• Buyer interest is building beneath the surface.

Combined, these factors point toward a healthier, more active market in the coming year.

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Final Thoughts

The market may not be roaring yet, but the shift is unmistakable. Slightly better rates, growing demand, and improving inventory are creating the conditions for a meaningful recovery in 2026.

If you’re considering buying or selling soon, now is the time to understand your position and prepare. When the market opens up, being ready will make all the difference.

If you’d like a personalized breakdown of what this means for you, I’m always here to help.