This month’s housing market update focuses on what’s changing as we move into 2026 — from affordability and inventory to migration patterns and regional momentum. We’ve pulled together the key insights to help you stay informed on what’s happening nationally and in your local market.

2026 Housing Forecast: How Policy, Inventory, and Regional Trends Are Reshaping the Market

The 2026 housing outlook points to a market in transition, with improving affordability, more inventory, and shifting regional momentum shaping the year ahead.

• Home sales are expected to rebound: Economists at the National Association of Realtors project up to a 14% increase in home sales nationally in 2026, driven by more inventory, easing rate pressure, and homeowners finally listing after years of staying put.
  
  
• Affordability should improve gradually: Home price growth is expected to remain modest at 2%–3%, roughly in line with inflation, while wage growth is expected to outpace both, helping buyers regain purchasing power even if rates stay elevated.
  
  
• Location matters more than ever: In high-cost metros like Los Angeles, San Diego, San Jose, San Francisco, Denver, and Salt Lake City, median home prices remain more than five times local incomes, keeping affordability tight.
  
  
• Inventory is improving, but shortages remain: Active listings are about 20% higher than last year, giving buyers more choice and reducing bidding pressure, though the market remains structurally undersupplied.
  
  
• Policy focus is increasing: Housing affordability remains a top priority for lawmakers, with efforts centered on zoning reform, reducing red tape, expanding modular construction, and addressing rising property taxes to gradually increase supply.
  
  
• Sun Belt growth is slowing: Long-term job growth leaders like Las Vegas are expected to see much slower growth in 2026, while parts of the Midwest and Northeast may see renewed momentum.
  
  

Big Picture: The Economy & Rates

Heading into 2026, the economy looks steadier than the headlines suggest, with growth holding up, paychecks keeping pace, and rates still the biggest variable to watch.

• Growth looks steady, not overheated: A consumer- and investment-focused measure shows the economy growing at a 3.0% real pace, pointing to sustainable momentum rather than excess.
  
  
• Paychecks continue to beat inflation: Wages have grown about 3.9% annually over the past decade, compared to 3.2% inflation, a trend economists expect to continue into 2026.
  
  
• 2026 growth outlook: The economy is expected to grow around 2.5%, in line with long-term averages, supported by consumer spending and business investment.
  
  
• Household finances remain relatively healthy: Debt payments account for just 11.2% of household income, near levels last seen in the 1980s and 1990s.
  
  
• Federal Reserve leadership in focus: President Donald Trump is expected to name a new Fed chair soon, a move markets will watch closely for potential impact on long-term rates, including mortgages.
  
  
• Credit card debt remains a hurdle: 47% of Americans carry balances, and 13% say it delayed or prevented a home purchase, though a proposed one-year 10% interest-rate cap could provide short-term relief versus today’s ~24% averages.
  
  
• Labor market remains supportive: Unemployment dipped to 4.4% in December, wages are growing at 3.8%, and hiring has cooled without signaling economic stress.

Rochester, NY ranks as the top city for first-time home buyers in 2026, unseating last year’s leader, Harrisburg, PA, thanks to budget-friendly home prices, strong income-based affordability, and short average commute times.

Best Markets for First-Time Home Buyers in 2026

According to data from Realtor.com, these cities have lower prices, manageable commutes, and better affordability ratios.

1. Rochester: Median list price ~$140K
2. Harrisburg: ~$152K
3. Granite City: ~$119K
4. Birmingham: ~$149K
5. North Little Rock: ~$170K
6. Syracuse: ~$170K
7. Baltimore: ~$224K
8. St. Louis Park: ~$375K
9. Pittsburgh: ~$249K
10. Garfield Heights: ~$140K
    
    
    

Jerome Powell, chair of the Federal Reserve, is under renewed pressure from President Trump as interest rates remain a major factor shaping mortgage costs in 2026.

A Few January Housing Headlines to Know

• Renovation costs get a pause: Planned tariff increases of up to 50% on cabinets and vanities and 30% on furniture were delayed for one year, easing near-term cost pressure.
  
  
• Buyer preferences are shifting: Practical design is winning out, with buyers prioritizing low-maintenance materials, fire-resistant features, and contemporary styles.
  
  
• Investor competition may ease: President Trump has said he plans to block large investors from buying single-family homes, a move aimed at improving access for everyday buyers.
  
  
• Fed leadership tension is in focus: Jerome Powell is facing increased pressure from Donald Trump, who has criticized Powell’s resistance to cutting rates, putting the Fed’s independence — and future rate direction — back in the spotlight.
  
  
• New-home prices hit a 4-year low: The median price of newly built homes fell to $392,300, down 8% year over year, as builders cut prices and ramp up incentives like rate buydowns to attract buyers.
  
  
• Supply discussions continue: U.S. homebuilders are meeting with White House officials this week to discuss incentives to boost construction, with potential announcements expected later this month.

Key Housing Trends Shaping the Market in 2026

• Most affordable states: West Virginia, Mississippi, Arkansas, Louisiana, and Alabama, with median home prices generally in the low- to mid-$200Ks.
  
  
• Seller expectations are adjusting: According to Redfin, 28% of sellers would rather pull their home off the market than cut price, signaling growing price sensitivity and a shift away from pandemic-era pricing power.
  
  
• Hidden housing costs are driving stress in 2026: Nationwide, escrow payments are up roughly 45% over the past five years, contributing to higher delinquency risk in high-tax and high-insurance states.
  
  
• Lower-cost metros are outperforming: From Nov. 2024 to Nov. 2025, median sale prices rose 11.6% in Cleveland, 10% in Cincinnati, 8.7% in Pittsburgh, 7.5% in St. Louis, and 5.0% in San Antonio and Kansas City.
  
  
• Investor presence remains elevated: Investors account for roughly one-third of single-family home purchases, particularly in markets where price growth has slowed and inventory is rising.
  
  

People keep choosing Texas. The state ranked No. 1 on the U-Haul Growth Index in 2025, with more households moving in than out for the 7th time in the last decade.

A Snapshot of Regional Housing Markets in 2026

Wondering how the housing market looks where you live? From migration trends and home prices to inventory changes and new housing policies, here’s a regional breakdown of what’s shaping housing markets across the U.S. as we move through 2026.

Top States People Moved To in 2025

Based on U-Haul one-way moving data showing which states saw the highest net inbound migration in 2025.

1. Texas
2. Florida
3. North Carolina
4. Tennessee
5. South Carolina
6. Washington
7. Arizona
8. Idaho
9. Alabama
10. Georgia

January 2026 Northeast Housing Market Snapshot

• Affordability is improving in parts of the Northeast, with several metros standing out for first-time buyers thanks to lower home prices and better income-to-housing ratios.

• • Rochester, NY: ~$140K median list price (most affordable for first-time buyers)
  • Syracuse, NY: ~$170K median list price
  • Harrisburg, PA: ~$152K median list price
  • Baltimore–Columbia–Towson, MD: ~$224K median list price
  • Pittsburgh, PA: ~$249K median list price
    
    
• Luxury taxes to watch: New Jersey’s new “mansion tax” adds a 1%–3.5% levy on homes priced at $1M+, prompting some sellers to raise asking prices to offset the cost.
  
  
• Affordable housing policy shift: Virginia is considering legislation that would allow cities to require affordable units in certain new developments.
  
  
• Rising assessments, phased impact: In Maryland, about 789,000 households will see home assessments rise by an average of ~13%, though tax increases will be phased in over three years.

Chicago’s housing market is warming up early. Buyers and sellers are jumping in sooner as limited inventory keeps competition high heading into 2026.

January 2026 Midwest Housing Market Snapshot

• Several Midwest markets stand out in 2026 for first-time buyers thanks to below-average home prices, solid inventory, and livability factors that help stretch a budget.

• • Granite City: ~$119K median list price
  • St. Louis Park: ~$375K median list price
  • Garfield Heights: ~$140K median list price  

• Cost pressures are shifting: While home prices remain low, property taxes and insurance costs are becoming bigger concerns heading into 2026.
  
  
• Chicago’s spring market is starting early: Low inventory and steady price growth are pulling buyers and sellers into action sooner than usual, with agents reporting fast-moving listings, multiple offers, and a competitive pace already underway in January.
  
  
• Property tax relief in focus: North Dakota expanded its primary residence credit to $1,600, which could eliminate state property taxes for 50,000+ households.

January 2026 Southeast Housing Market Snapshot

• Several Southeast metros remain among the most affordable places to buy in 2026, offering lower home prices compared to national averages.
  
  
  • Birmingham, AL: ~$149K median list price
  • North Little Rock, AK: ~$170K median list price
  • Jackson, MS: ~$160K median list price
  • Gulfport–Biloxi, MS: ~$210K median list price
    
    
• Property tax changes ahead: Florida may vote in 2026 on a ballot measure backed by Gov. Ron DeSantis that could reduce or eliminate property taxes on primary residences, impacting both homeowners and local government budgets.
  
  
• Ownership still within reach: Louisiana ranked among the five most affordable states, with a median home price around $249,857 and estimated monthly payments under $1,000.
  
  
• Nashville demand keeps shifting southeast: Antioch led the metro in home closings again in 2025 for the third straight year, as buyers continue to prioritize affordability, inventory, and access to major job centers—even as overall Nashville sales dipped slightly.
  
  

Housing affordability is taking center stage in Arizona. Gov. Katie Hobbs’ 2026 State of the State focused on tax relief and new funding ideas aimed at making housing more attainable for residents.

January 2026 Southwest Housing Market Snapshot

• Several Southwest metros and smaller cities still offer relative affordability compared with larger Sun Belt peers, giving buyers more options as price growth cools and local markets rebalance.
  
  
  • Coolidge, AZ: ~$300,000 median home price
  • Las Cruces, NM: ~$310,000 median home price
  • Casa Grande, AZ: ~$318,000 median home price
  • Tooele, UT: ~$385,000 median home price

• Price softening varies by market: In Salt Lake City, 46.5% of homes lost value over the past year, compared to Phoenix (87%), Las Vegas (81%), and Denver (91%). Despite declines, typical homeowners still hold about 67% equity gains since purchase.
  
  
• Luxury taxes expand: Santa Fe has begun collecting its 3% tax on $1M+ home sales, with proceeds funding affordable housing, though the policy faces legal and industry pushback.
  
  
• Arizona puts affordability front and center: Gov. Katie Hobbs made housing a key focus in her 2026 State of the State, floating tax relief and a new short-term rental fee to help fund affordability efforts as cost-of-living pressures continue across the state.
  

January 2026 Texas Housing Market Snapshot

• Several Texas metros continue to offer relative affordability compared with larger, higher-cost Texas markets, giving buyers more flexibility as price growth cools and inventory improves.
  
  
  • San Antonio: ~$290,000 median home price
  • El Paso: ~$230,000 median home price
  • McAllen: ~$210,000 median home price
  • Corpus Christi: ~$285,000 median home price
    
    
• Multifamily investment remains active: A 386-unit apartment sale in Dallas marked the largest 1960s-era multifamily transaction in DFW over the past 18 months.
  
  
• Migration tailwinds continue: Texas ranked No. 1 in the U-Haul Growth Index for 2025, reclaiming the top spot for the 7th time in 10 years.
  
  
• Luxury condos reshape Houston: Condo inventory rose 28%, while median prices fell 7.5%, even as new branded developments priced from $1.2M–$2.4M signal demand for upscale urban living.
  
  

January 2026 Northwest Housing Market Snapshot

• Several Pacific Northwest markets remain relatively affordable compared with high-cost metros like Seattle and Portland, giving buyers more value in 2026.
  
  
  • Spokane, WA: ~$356,000 median home price 
  • Yakima, WA: ~$365,000 median home price 
  • Kennewick, WA: ~$414,000 median home price
  • Pendleton, OR: ~$283,000 median home price
    
    
• Out-migration continues: In Oregon, about 53% of moves left the state in 2025, driven by high housing costs and mortgage lock-in.
  
  
• Transit-oriented growth: New housing is increasingly clustering around Link light-rail stations in Bellevue, Redmond, Lynnwood, and Federal Way, nudging buyer demand away from Seattle’s core and toward well-connected suburbs.
  
  
• More homes, steadier demand: Active listings in Washington rose about 23% year over year, prices have eased slightly, and home sales picked up toward the end of 2025

January 2026 California Housing Market Snapshot

• While statewide prices remain high, several California cities stand out for comparatively lower median home prices that may appeal to value-focused buyers.
  
  
  • Bakersfield: ~$393,000 median home price
  • Stockton: ~$431,500 median home price
  • Sacramento: ~$476,000 median home price
  • Eureka: ~$412,000 typical home price
    
    
• Wildfire recovery remains slow: One year after the Pacific Palisades wildfire destroyed nearly 5,500 single-family homes, rebuilding continues gradually as many residents remain in wait-and-see mode.
  
  
• Urban infill gains ground: A former theater site in San Francisco’s West Portal neighborhood will become a nine-story, 64-unit development, including 10 below-market-rate homes.
  
  
• Policy priorities reaffirmed: In his final State of the State, Gov. Gavin Newsom emphasized housing affordability, wildfire rebuilding, and expanding supply as key 2026 focuses.
  
  
• Senior housing investment grows: New financing supported the acquisition of a 156-unit senior housing community in Aliso Viejo, highlighting increased investment in age-friendly housing.
  

Be sure to check back next month for our updated insights and trends to keep you informed on the latest developments. In the meantime, if you’re thinking about buying, selling, or refinancing, our Home Loan Specialists are always ready to help you make the right move.

Frequently Asked Questions

Check our FAQs for responses to our most popular questions about our monthly housing updates.

How often does Churchill Mortgage send out market updates?

We publish real estate updates at the start of every month to help you stay informed on housing trends, mortgage rates, and economic news that could impact your next move.

Is the housing market going to crash in 2026?

Most forecasts don’t point to a crash. Economists expect modest home price growth (around 2%–3%) and a gradual rebound in home sales as more inventory comes to market. In many areas, the market is simply shifting from “frenzy” to “more balanced,” which can feel like a reset instead of a drop.

Will mortgage rates go down in 2026?

Mortgage rates are still the biggest variable heading into 2026. Rates may ease over time, but they can move quickly based on inflation, jobs data, and Federal Reserve decisions. If you’re watching for a better window to buy or refinance, Churchill Mortgage’s Rate Watch can help you track rates and get notified when they hit your target.

 

Are home prices going down in 2026?

In most areas, prices aren’t expected to drop dramatically. Instead, forecasts point to slower growth and more normal seasonal movement. Some markets may see price declines while others stay flat or rise slightly, so local inventory and demand matter more than national headlines.

 

Are new construction homes getting cheaper in 2026?

In many markets, yes. New-home prices have fallen year over year, and builders are offering more incentives to attract buyers. These incentives may include closing cost help or rate buydowns, which can lower monthly payments.

How do I sign up to receive Churchill Mortgage’s market updates?

Just visit churchillmortgage.com/articles and look for the “Sign Up for Our Email Newsletter” section on the right-hand side near the bottom of the page.

Where are the best places to buy a home in 2026?

Some of the top markets for first-time buyers in 2026 are showing up in more affordable cities with manageable commutes and stronger affordability ratios, including places like Rochester, NY, Harrisburg, PA, Syracuse, NY, Birmingham, AL, and Pittsburgh, PA.

Can I talk to someone about what this means for my local market?

Absolutely! You can connect with a local Churchill Home Loan Specialist to talk through your goals and how market trends may impact your options.

Just click here to find an expert near you!

How can Churchill Mortgage’s Rate Watch program help buyers?

Churchill Mortgage’s Rate Watch program helps buyers by monitoring mortgage rates and notifying them when rates drop to their desired level. This gives buyers the opportunity to lock in lower rates, potentially saving thousands over the life of their loan. It's an excellent tool for buyers looking to maximize savings in a fluctuating market.

Why should I read Churchill’s real estate updates each month?

The housing market is always changing, and even small shifts in mortgage rates, inventory, or the broader economy can have a big impact on your buying power and timing.

Churchill’s monthly updates break down what’s happening nationally and regionally so you can stay ahead of the curve. Whether you're actively planning a move or just keeping an eye on the market, staying informed helps you make smarter decisions—like when to lock in a rate, start a refinance, or begin your home search. We sort through the data, so you don’t have to.