Real estate expert forecasts housing market 'reset' in 2026

Key Concepts

• Tunnel to Towers Foundation: A charity providing mortgage-free homes to injured veterans and families of fallen first responders.
• Mortgage Rates: The interest rate charged on a home loan, currently fluctuating and impacting housing affordability.
• Treasury Yield & Bond Market: Factors influencing long-term interest rates, creating a “higher for longer” environment.
• Market Normalization: A shift away from the exceptionally low interest rate conditions of 2020-2021 towards a more balanced housing market.
• Market Reset (Florida & Texas): A correction in housing markets that experienced rapid price increases, leading to increased affordability and equilibrium.
• Inventory: The number of homes available for sale, impacting price appreciation.

Veteran Receives Mortgage-Free Home & Housing Market Analysis

The segment begins with a heartwarming story of First Sergeant John Mike Fairfax, a U.S. Army veteran severely injured in Afghanistan in 2005, receiving a complete home makeover and having his mortgage paid off by the Tunnel to Towers Foundation. This act is part of the foundation’s initiative to deliver 50 mortgage-free homes to veterans and their families in the 24 days leading up to Christmas. Sergeant Fairfax is currently pursuing a Master of Divinity degree, focusing on preaching and pastoral ministry. As stated, “It’s really a fantastic charity.”

Mortgage Rate Trends & Projections

The discussion then shifts to current mortgage rate trends. Initially around 7% at the start of the year, 30-year fixed mortgage rates have decreased to 6.18% as of the broadcast date. Katrina Campins, a real estate expert, predicts mortgage rates will average around 6.3% in 2026, representing an improvement but not a return to the ultra-low rates of 2020-2021. She emphasizes that dips below 6% will likely be temporary, constrained by “ongoing pressure from the Treasury yield and the bond market.” The current economic climate is described as a “higher for longer environment,” meaning structural factors like government debt and global bond demand are keeping rates elevated.

Campins notes that even modest rate declines can improve affordability and unlock sidelined demand, but cautions against expecting a market “boom.” She stresses the importance of “timing matters more than perfection,” advising buyers not to wait for dramatically lower rates, as the current environment favors negotiation. Specifically, she states that sustained rates below 6% would require “lower inflation, stable economic growth and reduced bond market volatility.”

Regional Housing Market Performance: Florida & Texas

A significant portion of the conversation focuses on the diverging performance of housing markets in Florida and Texas compared to the Northeast and Midwest. Nine out of the ten weakest markets for home price growth are located in Florida and Texas. This slowdown is attributed to a rapid influx of out-of-state buyers during periods of historically low mortgage rates, followed by a decline in demand as rates increased. The increased supply of homes built or purchased during the boom further contributed to competition and price reductions.

Campins characterizes this situation in Florida as a “healthy rebalancing” after “unsustainable gains,” leading to improved affordability and a more equitable market for buyers and sellers. Importantly, she highlights that Florida’s underlying economic fundamentals – employment growth, population inflows, and long-term demand – remain strong, positioning it for “more stable, sustainable growth” once interest rates normalize. She confirms ongoing sales activity in Florida, stating she has “many deals…under contract.” Between 2026-2030, Florida is projected to see an annual influx of approximately 300,000 residents, sustaining demand despite economic shifts.

Regional Housing Market Performance: Northeast & Midwest

In contrast to the South, the Northeast and Midwest are experiencing more home price growth. This is due to limited new construction and lower inventory levels, resulting in continued demand and price appreciation. Campins explains, “There wasn't a lot of building, so there's less inventory in those markets, and there's still demand in those markets.” This contrasts with the South, where previous rapid gains are now “equalizing.”

Conclusion

The segment concludes with a positive outlook for 2026, anticipating a “reset” in the housing market. Campins expresses optimism about the future, emphasizing the importance of sustained population growth and migration patterns, particularly in states like Florida. The overall message is one of cautious optimism, acknowledging the challenges of the current market while highlighting opportunities for both buyers and sellers.