AUSTIN (KXAN) writes, "The U.S. Housing market may enter a “great reset” on home prices in 2026, according to a report from the real estate company Redfin.
“It won’t be a quick price correction, and it won’t be a recession,” the report states. “Instead, the Great Housing Reset will be a years-long period of gradual increases in home sales and normalization of prices as affordability gradually improves. It will start next year, with incomes rising faster than home prices for a prolonged period for the first time since the Great Recession era [2008].”
The report was written by Redfin’s Chief Economist Daryl Fairweather and Head of Economics Research Chen Zhao.
Zhao and Fairweather made 11 predictions in the report, most of which focused on the national housing market. One prediction is that AI tools will become more prevalent in the home buying process, and another states that natural disasters will increasingly cause people to move.
The report also predicts that the growth of home prices will fall below the rate of wage growth. This could put many potential buyers into a better position next year.
“We’re now moving into a world where the market is going to be resetting back to pre-pandemic levels of affordability. And that is not super affordable by any means,” Zhao said. “We’re still dealing with a housing shortage in this country, but it will be a bit of a relief compared to what people have experienced these last few years.”
Buyers were at an advantage in 2025, and it’s likely that will continue into 2026. Some metros, including Austin-Round Rock and San Antonio, could “cool down” over the next year, according to the report.
“We’re not expecting huge declines in prices, even in a place like Austin. We’re expecting, though, that home prices won’t start accelerating,” she said. “So basically, home price growth will remain pretty muted, and it might even remain negative in Austin.”
“When you combine that with slightly lower mortgage rates, that means that buyers are finally getting a little bit of a break and that should bring more buyers into the market, which should be helpful for sellers,” Zhao explained. “Home prices really shot up about 40% across the country during the pandemic. And then, right on the heels of that, when we had high inflation, the Federal Reserve increased mortgage rates a lot.”
One certainty for next year is that the Federal Reserve will get a new chair when current Chairman Jerome Powell’s term ends. And, since the Fed determines interest rates, that appointment will influence interest rates for mortgages.
Redfin’s report predicts average 30-year mortgage’s interest rate will drop by 0.3 percentage points next year, but remain above 6%."
Source: KXAN Austin
Written by: Cora Neas
Published: December 4, 2025
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