The housing market’s ‘next era’ is just around the corner 

After a prolonged real estate slowdown, the numbers suggest the market is ready to turn the corner in 2026, according to Mike Simonsen.

Simonsen, known for his data-driven analysis while at his company Altos Research, sold the firm and joined Compass as its first chief economist earlier this year. In his inaugural forecast with the brokerage, he noted that despite the conflicting signals in the overall economy, the tide appears to be turning.

That doesn't mean it's time for agents to break out the champagne, however. He's expecting a slow improvement in affordability and mobility, with existing home sales in the 4.25 million range next year — still well below pre-pandemic levels.

Simonsen also foresees little change in home prices — an increase of less than 1% — but a 10% jump in inventory.

"I look at 2026 as the next era for the housing market," Simonsen told Real Estate News. "We've been stuck in the old era for four years where we've had frozen sales and prices staying stubbornly high. In the new era, we have sufficient inventory where sales can finally grow and incomes rise faster than prices."

Uneven gains in an increasingly divided economy

Although the market should start improving, those gains won't be distributed equally. The so-called "K-shaped economy" — where high-income Americans see their wealth growing, while lower-income brackets are struggling amid inflation and stagnant wages — will continue to impact the real estate market.

In addition to slow wage growth, many companies aren't hiring. Some are trying to wind back their post-pandemic over-hiring, and others are responding to economic uncertainty by taking a conservative approach to corporate planning for 2026, according to Simonsen's report. Fewer job opportunities means less mobility — something the real estate market relies on.

Another divide? The ultra-low mortgage rate "haves" vs. the high rate "have nots." Regional differences in earnings, cost of living, inventory and more also influence local markets.

"It's a divergence not just of prosperity, but it's also geography," Simonsen said, noting the contrast between real estate markets in the Northeast and those in the South and Sun Belt regions. "So all those factors will come into play this year."

What to watch for in 2026

So what data points are making Simonsen optimistic about 2026? A big one is the current number of delistings or withdrawals, which he estimates to be around 150,000 nationally, creating "shadow inventory" — something he thinks agents should be paying attention to.

In 2008, economic distress was the cause of shadow inventory — people could no longer afford their home because they were underwater on their mortgages, or they purchased properties as an investment but found themselves stretched too thin. Simonsen's research suggests the situation is very different today. 

The current shadow inventory is held by homeowners who have plenty of equity (and possibly a very low mortgage rate) and would like to sell their house to buy something else when market conditions are more favorable.

Given the available inventory, if mortgage rates and hiring improve, that could lead to more double-transaction scenarios and a rise in sales.

"But it has to be the right combination of those variables to get there," Simonsen said.

Heading into the spring homebuying season, Simonsen said he'll be looking at three data points when trying to gauge how busy it will be:

• The rate of new listings: A steady rise would bode well for the spring market; a flood of new homes would spark concern.

• Pending home sales: The number of homes going under contract on a weekly basis can show whether demand momentum is building.

• Hiring: If companies are adding workers, that means mobility should start picking up, leading to more home sales and purchases.