The U.S. Housing Market: What to Expect in the Second Half of 2026

grace264
2 days ago
3 min read

At the beginning of this year, I heard the same questions over and over:

"If mortgage rates come down, won't home prices surge again?"
"Should I keep waiting?"
"Is now a good time to sell?"

Now that the first half of 2026 is behind us, forecasts from leading real estate organizations and economists are pointing in a remarkably similar direction.

The bottom line?

The market isn't heading for a boom or a bust—it's gradually returning to a more balanced, healthy market.

Here's what experts expect for the second half of 2026.

1. Will Home Prices Continue to Rise?

This surprises many people.

Although headlines often focus on slower home sales, national home prices remain near record highs.

The key difference isn't whether prices are rising—it's how quickly they're rising.

The double-digit price appreciation we saw during the pandemic housing boom is largely behind us.

Most economists expect:

Modest home price appreciation, or
Stable prices depending on the local market

In other words, a sharp nationwide price decline appears unlikely, but so does another period of rapid price growth.

2. Will Housing Inventory Continue to Increase?

This is one of the best pieces of news for buyers.

Over the past several years, the biggest challenge wasn't demand—it was simply finding a home to buy.

Fortunately, inventory has been steadily improving across many parts of the country, giving buyers significantly more choices than they had just a few years ago.

Of course, every market is different.

Some areas remain strong seller's markets, but the days when nearly every listing received multiple offers within 24 hours have become much less common.

3. Buyers Are Regaining Negotiating Power

As inventory grows, negotiations naturally become more common.

Today's buyers are increasingly able to negotiate for:

Closing cost credits
Seller concessions
Price reductions
Inspection-related repairs

Just a few years ago, sellers often had the upper hand.

Today, buyers have more options and more leverage than they've had in years.

4. Does This Mean It's a Bad Market for Sellers?

Not at all.

Well-priced, well-prepared homes continue to sell quickly.

What's changed is that simply listing a home at an ambitious price and expecting buyers to compete is no longer an effective strategy.

Today's successful sellers focus on:

Accurate pricing
Professional photography
Excellent home presentation
Strategic marketing

Throughout the Chicago area and across Illinois, homes priced realistically continue to attract strong interest, while overpriced listings are spending more time on the market.

5. Mortgage Rates Remain the Biggest Variable

Most economists do not expect mortgage rates to fall dramatically during the second half of the year.

However, even modest improvements in mortgage rates could encourage many buyers who have been waiting on the sidelines to re-enter the market.

As a result, many industry experts expect home sales to gradually improve during the second half of 2026.

Preparation Matters More Than Perfect Timing

Real estate has never been about finding the "perfect" time.

It's about being prepared when the right opportunity comes along.

Today's market offers:

More choices for buyers
More competition for sellers
A gradual return to a healthier, more balanced housing market

No one knows exactly where mortgage rates will be next year.

But if you're financially prepared and your move makes sense for your personal situation, waiting for the "perfect" market may not produce a better outcome.

A Local Perspective from Chicago

The Chicago and Illinois housing markets are following many of the same national trends, but local conditions still vary significantly.

Even within the same city, market conditions can differ based on: