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Redfin Predicts 2026 Housing Market Reset With 1% Price Rise, Wage Gains, and Higher Refinancing

Updated (3 articles)

Modest price growth paired with wage outperformance. Redfin projects the median U.S. home price will increase about 1 % year‑over‑year through 2026, a sharp slowdown from the multi‑year gains of the past decade[1][3]. For the first time since the Great Recession, wage growth is expected to exceed home‑price growth, offering buyers a modest improvement in purchasing power[1][3]. October 2025 sales showed a median price of $439,869, up 1.3 % from the prior year, still well above the pre‑pandemic median of $313,200[3].

Mortgage‑rate outlook and refinancing surge. The average mortgage rate is forecast to fall to roughly 6.3 % in 2026, down from 6.6 % in 2025, with occasional dips below 6 % but no sustained low‑rate environment[1]. Freddie Mac reported a 6.23 % weekly decline in late November, yet Redfin cautions rates will likely stay in the low‑6 % range due to inflation risks[3]. Anticipating the modest rate easing, refinance volume is expected to jump more than 30 % as homeowners seek to replace higher‑cost loans[2].

Home‑sales rebound and inventory trends. Existing‑home sales are projected to rise 3 % in 2026, reaching an annualized 4.2 million units, marking a gradual rebound after four consecutive months of year‑over‑year declines earlier in the year[1][3]. The October 2025 month recorded 445,607 sales, a 2.4 % increase from the prior year, indicating a stronger spring season as rates modestly decline[3]. Despite the recent dip, Redfin expects the market to recover over a five‑year horizon, returning to pre‑pandemic activity levels[2].

Rent growth and shifting household composition. Renters are projected to face 2–3 % rent increases by the end of 2026 as apartment construction slows and demand rises[1]. Approximately 6 % of Americans lived with their parents in mid‑2025, a figure expected to climb as affordability pressures persist[1]. Redfin notes a broader shift away from the traditional nuclear family, with more adult children remaining at home and younger buyers exploring co‑housing or delaying family formation[2][3].

Persistent affordability challenges despite modest gains. While wages now outpace price growth, many Gen Z and young families remain priced out of homeownership, reinforcing the need for alternative living arrangements[3]. The forecasted modest price rise and limited rate relief mean affordability pressures will ease only gradually, not eliminating the need for multi‑generational living or rental reliance[1][3].

Sources

Timeline

2008 – Wage growth is projected to outpace home‑price growth for the first time since the Great Recession, offering a potential relief to buyers who have struggled with stagnant incomes. [2]

2019‑2023 – A buying frenzy driven by historically low borrowing costs fuels rapid price gains, establishing a high baseline that later hampers affordability. [1]

Pre‑pandemic (early 2020) – The median U.S. home price sits at $313,200, a benchmark that remains far below October 2025’s median of $439,869, underscoring how prices have surged despite modest recent growth. [1]

Feb–May 2025 – Existing‑home sales fall year‑over‑year for four consecutive months, the slowest stretch since 2019‑2023, signalling waning demand amid elevated mortgage rates. [1]

Mid‑2025 – About 6 % of American households move in with their parents because of affordability stress, a share Redfin expects to climb as 2026 progresses. [2]

Oct 2025 – Home sales reach 445,607 units, a 2.4 % increase from a year earlier, while the median sale price climbs to $439,869, still well above the pre‑pandemic median. [1]

Week ending Nov 26 2025 – Mortgage rates drop 6.23 % according to Freddie Mac, yet Redfin cautions that rates will likely stay in the low‑6 % range throughout 2026 because of inflation risk. [1]

2025 (overall) – Redfin forecasts a 3 % rise in annualized home sales to 4.2 million units in 2026, indicating a gradual rebound in market activity. [1][2]

2026 (forecast) – Median home prices are expected to rise 1 % YoY, marking a sharp slowdown from recent multi‑year gains and highlighting a modest recovery. [2][1]

2026 (forecast) – Average mortgage rates are projected at 6.3 %, with occasional dips below 6 % but no sustained low‑rate environment, limiting borrowing‑cost relief for new buyers. [2]

2026 (forecast) – Refinance volume is set to surge more than 30 % as homeowners rush to lock in lower rates, potentially boosting household cash flow. [3]

2026 (forecast) – Rent prices are projected to increase 2–3 % by year‑end as apartment construction slows and demand rises, keeping many Americans in the rental market longer. [2]

2026 (forecast) – Household composition continues shifting away from the nuclear family; more adult children live with parents, and Redfin warns the market will need about five years to return to pre‑crisis norms. [3]

Gen Z & young families (2025‑2026) – Younger buyers remain priced out, turning to co‑housing or delaying family formation, a trend that could reshape demand patterns for years to come. [1]

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