A 'new era' in the housing market is about to begin as affordability finally improves 'for the first time in a bunch of years,' economist says | Fortune

"Prices are now becoming more favorable for house hunters, a trend that should continue in 2026 and change the narrative in the housing market. "In the next era, that story flips. So sales are starting to move higher, but prices are capped or maybe down. Incomes are rising faster than prices, and so affordability improves for the first time in a bunch of years," Simonsen told CNBC on Friday. "It's not a dramatic improvement, but it's the start of the new era.""

"Simonsen said listing withdrawals tend to be owner-occupied homes, meaning they could be latent demand as well as supply. That's because two transactions would be needed: owners want to buy a new home but must sell their current one. "In an environment where conditions improve a little bit, we actually estimate that that's a representation of shadow demand-people that want to move, people that have delayed moves for maybe four years now," he said, adding that there are about 150,000 such homeowners."

"Next year should mark a shift in the housing market after years of largely being frozen in place, according to Mike Simonsen, chief economist at top residential real estate brokerage Compass. Home sales flatlined amid unaffordable conditions after rising demand collided with tepid supply growth, pushing up home prices. Would-be buyers became so discouraged that demand cooled and remains slow."

Next year should mark a shift in the housing market as affordability begins to improve. Home sales stalled when rising demand met tepid supply, pushing up prices and discouraging many buyers. Prices are becoming more favorable for house hunters and that trend is expected to continue into 2026. Withdrawn listings increased sharply, with delistings up 47% in June, and many withdrawals represent owner-occupied homes that create shadow demand. About 150,000 homeowners may have delayed moves and could re-enter the market when conditions improve. The outlook for improving affordability does not require a steep drop in mortgage rates.

Read at Fortune