7 key factors
1. Buyers are tired of waiting: Americans have put off moving for nearly four years, but now there is a surge in demand. In Sun Belt markets like Austin and Naples, buyers are finding more inventory, less competition, lower prices, and higher incomes since 2022. Combined with favorable mortgage rates, motivated buyers are entering the market.
2. Sun Belt inventory = room for sales growth: Cities like Austin, Phoenix, Denver, and parts of Florida have enough supply to support an increase in transactions. Although prices may be soft, this presents an opportunity for bargain hunting. The current inventory levels in these areas are conducive to growth.
3. The Northeast and Midwest need more listings: Markets such as Chicago, New Jersey, Boston, and the Midwest and Northeast are facing a shortage of listings compared to 2019. To achieve a Goldilocks scenario, an increase in new listings is required next spring. Without a rise in supply, sales growth will be limited in these regions.
4. Hiring improvement, even with rising unemployment: Recent labor market data shows a positive trend in hiring alongside rising unemployment. This combination is not contradictory, as more Americans, especially those over 55, are re-entering the workforce. This could lead to lower interest rates while keeping buyers confident. A balanced job market is essential for a successful 2026.
5. The great withdrawal phenomenon = shadow demand: The high number of withdrawals in 2025 indicates frustrated sellers pulling listings without offers. This may suggest shadow demand rather than inventory, with many withdrawn listings belonging to owner-occupants. Each withdrawn listing represents two delayed transactions, hinting at potential growth in home sales without a significant increase in inventory.
6. Bargain psychology matters: After several years of stagnant or declining prices in cities like Denver, Austin, and Tampa, prices entering 2026 remain favorable. The combination of lower prices and interest rates attracts buyers who have been waiting for such an opportunity. The right balance is crucial for encouraging early buyers to act.
7. Weather is a swing factor: Weather conditions, particularly in Florida, can significantly impact national sales growth. A cooperative hurricane season can boost sales, as seen in 2025 when the absence of major hurricanes led to increased pending sales in the state.
The Goldilocks setup
Here’s a summary of what needs to happen for a successful sales year in 2026:
- Mortgage rates remain around 6%, stimulating buyer activity.
- Owner-occupants from 2025 withdrawals lead to increased sales transactions.
- Soft prices in key Sun Belt metros attract bargain hunters.
- Improvements in hiring keep buyers confident and rates low.
- Favorable weather conditions, especially in hurricane-prone areas.
While the Goldilocks scenario is not guaranteed, the current market conditions suggest a stronger year ahead. However, external factors such as inflation, job losses, or economic anxiety could impact the outcome. For now, the ingredients for a successful 2026 are coming together, and only time will tell if they align perfectly.