The Good, the Bad, and the Ugly

Welcome to 2026! Although 2025 appears to have been a trying year for many, the advent of a new year has adjusted attitudes, and we’re all looking forward to a bright future. I’d like to take this opportunity to share a few details of how 2025 panned out, and what experts predict for the 2026 housing market year.

1. New housing starts for 2025 were down considerably from predictions due to lack of

qualified labor (due to immigration crackdowns), tariffs (approximately 60% of

construction suppliers have raised prices substantially), weakening job market nationwide, and high borrowing costs (rates did not drop as much as advisors speculated). When all the final numbers are in, it is expected that new housing starts as a whole will have dropped 7% year over year from 2024. This may have affect on market availability, especially in the workforce house market.

2. On the bright side, townhome construction gained, and accounted for about 18% of all single-family starts in the second quarter, nationwide. This is up 4% from 2024, expected to continue to rise, and will allow for an affordable solution for many buyers.

3. Existing home sales are expected a modest rise of 1.7% in 2026, allowing current homeowners a bright spot for selling their homes in 2026.

4. The Fed currently only has one rate cut penciled in for 2026, so be prepared for rates to likely hold steady where they ended in 2025.

5. The market has slightly shifted to buyer’s advantage, due to added inventory and increased days on market.

6. AI has made significant advances in assisting buyer and sellers with searches and valuations. However both groups still prefer the presence of humans to represent them in their real estate needs, trusting the stressful and emotional nature of the home buying process to be handled by real people who are compassionate to our human needs to feel safe and secure in these transactions.

7. Zillow predicts a large section of Americans will opt to rent rather than buy, allowing for buyers to move assets to the long-term rental market.

We will all need to take a “wait and see” position for 2026, and make decisions best suited to us based on the knowledge we have at the time we engage in real estate transactions. I am here anytime you would like to discuss current conditions, chat about purchasing or selling your home, or just need a hand to hold while you decipher the best plan for your future.

All the best in 2026!

Carmen

Broker/Owner Touchstone Real Estate