"The 2026 housing market is shaping up to be anything but predictable. With expectations that President Donald Trump's administration will appoint a new Federal Reserve chair this year, questions remain about the potential impact on monetary policy. If the Federal Reserve lowers interest rates, will mortgage lenders follow suit? Recent history suggests the relationship between Fed actions and mortgage rates is not always direct."
"Tamara Suminski, broker and current President of the California Association of Realtors, indicated California's housing market is expected to gain modest momentum in 2026. Statewide home sales are projected to increase by approximately 2%, while the median home price is forecast to rise a manageable 3.6%. With interest rates anticipated to ease slightly next year, affordability is expected to improve marginally, offering buyers some relief."
"At the local level, several members of the Santa Clara County Association of Realtors report that additional inventory may come to market early in 2026, as some sellers who previously delayed or withdrew listings plan to re-enter in anticipation of a stronger market. Overall, supply and demand are expected to move toward a more balanced dynamic. Terese Ferrara, 2026 president-elect of the Santa Clara County Association of Realtors, noted that market conditions are already shifting."
Monetary policy uncertainty and global instability are creating an unpredictable 2026 housing outlook. Federal Reserve leadership changes could influence interest rates, but mortgage rates do not always move in direct response to Fed actions. Inflation and a softening job market have weighed on consumer confidence. California is forecast to see modest momentum with statewide home sales up about 2% and median home prices rising roughly 3.6%. Slight easing of interest rates should marginally improve affordability. Local markets may see more inventory early in 2026 as delayed sellers re-enter, shifting supply and demand toward greater balance and more contingency-based offers.
Read at San Jose Spotlight
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