Will the Housing Market Crash in 2026? Top Predictions We Kinda Agree With
Will the Housing Market Crash in 2026? Top Predictions We Kinda Agree With.
That’s exactly where Kind Lending shows up. We ‘ve dug into the most relevant industry articles, market commentary, and forward-looking insights to cut through the noise and outline what this year is most likely to bring for housing and lending. No hype. No guesswork. Just a clearer picture of what we think is ahead.
We’re also sharing practical guidance on how Kind’s Top Dog partners can lean into products as solutions, helping you sharpen your focus, stay competitive, and position your business to grow stronger in 2026.
This is about planning with confidence, backed by perspective, partnership, and a lender that’s built to help brokers win.
Mortgage rates hover in the 6% range.
Even with more anticipated Fed cuts to overnight bank rates in 2026, it’s likely mortgage rates will continue to price higher in the secondary market due to risks, costs and default rates. That said, it’s possible a mortgage rate that dips below 6% will have potential to boost new applications. Especially as more borrowers start to accept that pandemic-era rates are not likely to return anytime soon.
https://www.fanniemae.com/media/56531/display
https://www.cnbc.com/2025/12/17/mortgage-rates-moved-higher-after-fed-rate-cut.html
Housing inventory is rising.
Builders have been slowing down production in 2025 on new homes, with SFR starts and permits down 6-7% from the previous year. However, the inventory of existing homes is moving upward, reaching a 6 year high as more homeowners start listing. For borrowers, even a minor rise in housing supply can mean more room for pricing negotiations and reduced competition for homes in some markets.
https://www.realtor.com/research/data/
Housing affordability starts to shift (slowly). The good news is that a sudden housing market crash is currently seen as unlikely by most experts. Instead, a combination of slower pricing appreciation (1% - 3%), wage growth (3% - 4%) and mortgage rate decreases could signal a long recovery towards a more normalized market. Even a small uptick in affordability will help more buyers and sellers come off the sidelines in 2026.
https://www.housingwire.com/articles/housing-affordability-2026/
Home price gains are now hyper-local. Home prices are down 1.5% on a national level, however that doesn’t necessarily represent your borrowers’ experience in local markets. While certain markets like Tampa, Houston, Atlanta, and Phoenix were down slightly, New York City, Chicago, Philadelphia Pittsburgh and Boston saw gains.
https://www.cnbc.com/2025/12/11/us-home-prices-negative.html
The rise of Non-QM financing continues. Demand is still growing for home loans that support self-employed borrowers, real estate investors, borrowers above conforming loan limits and buyers with complex income scenarios. With this increasing share of non-conforming and Non-QM, savvy brokers may find more opportunities outside of GSE guidelines in 2026.
https://nationalmortgageprofessional.com/news/non-conforming-loans-surge-led-record-non-qm-share
Average age of FTHBs stays at 40-something. Along with setting a record-high of 40 years old for average age in 2025, the share of first-time home buyers was the lowest on record - only 21% of home purchases. Since hurdles like home prices, inventory, down payment, slower wage growth and student debt take time to shift, this trend is likely to continue into 2026.
https://moneywise.com/real-estate/the-average-first-time-homebuyer-is-now-40-the-oldest-on-record
U.S. Homeowners continue to tap home equity. While average U.S. home equity dipped slightly in Q4 2025, the average borrower still has about $299k in accumulated equity going into the new year. More rate-locked homeowners with growing needs may refocus on using home equity to improve their current house instead of buying or refinancing at a higher rate.
https://www.cotality.com/press-releases/u-s-home-equity-dips-fall-2025
Climbing costs of home ownership deter some buyers. Home insurance, utilities, HOA and property taxes – will keep trending up. These additional costs make it harder for buyers to qualify and drives selling prices down. Expect more interest from borrowers in DPA, blended income products, and non-traditional paths – like Boomers using home equity to buy homes for adult children.
https://www.census.gov/newsroom/press-releases/2025/acs-1-year-estimates.html
https://www.nytimes.com/2025/11/18/realestate/home-ownership-housing-market.html
Bank deregulation as a major theme in 2026. U.S. regulators seem likely to ease capital rules (like the eSLR) and government guidance to encourage lending. There’s also potential for Basel III Endgame (B3E) rules in the U.S. and digital asset frameworks (Stablecoin Act by July 2026) to create a more flexible environment for banks in 2026. These changes could boost community and traditional banks by unlocking capital and increasing their lending capacity, generating more competition.
AI expands further into real estate and lending. In 2026, keep an eye out for real estate AI tools focused on hyper-automation, home search, predictive analytics, and personalized client engagement. For lending, we’re likely to see more AI used in pricing, underwriting and risk analysis. AI may take longer to trigger deeper process shifts in origination, servicing, secondary markets, and risk oversight because these depend on transformations in legacy data and systems.
What can you do to prep for success in 2026?
- Get up to speed on current Non-QM and Jumbo, Non-Q, HELOC and Closed-End Seconds products and guidelines – as well as options for DPA and blended income. If you haven’t talked with your Kind AE recently, reach out for a meeting in Q1 to review what’s new and coming soon.
- Check out the AI Guides in Kind’s Kwik Resources. Having AI-powered tools at your fingertips can give you an advantage in quickly identifying and pricing solutions for your complex borrower scenarios.
- Be ready with a great answer for your borrower’ questions about what to expect with mortgage rates in 2026. Help them understand that waiting for pandemic-era mortgage rates to return isn’t a strategy. Showing a historical chart of 30-year fixed rates (https://www.macrotrends.net/2604/30-year-fixed-mortgage-rate-chart) might help give them a better perspective on today’s rates.
- Become the local market expert. Get informed on how home prices are changing in your market and check monthly, so you can be ready to have that conversation with borrowers.
- Use visual tools and data to help show borrowers how the long-term investment of homeownership can still be an effective way of building wealth, even at different stages in life and in changing markets.
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