BALTIMORE, MD – The U.S. housing market in 2026 is expected to enter a period of recalibration, with modest improvements in affordability, gradual mortgage rate easing, and persistent inventory constraints, according to forecasts from major real estate analytics firms and economists as of late December 2025. This outlook suggests a balanced environment rather than dramatic swings in prices or sales, influenced by elevated borrowing costs and homeowner reluctance to sell.
Mortgage rates are projected to average in the low- to mid-6% range throughout 2026. Redfin anticipates a 30-year fixed rate averaging 6.3%, down from 6.6% in 2025, driven by potential Federal Reserve actions amid a softening labor market. Zillow and Realtor.com similarly forecast rates unlikely to fall below 6%, with averages around 6.3%. The Mortgage Bankers Association sees rates holding between 6.3% and 6.4%. These levels, while lower than recent peaks, remain significantly above pandemic-era sub-3% figures, sustaining the “lock-in” effect where homeowners with rates around 4.3% (as reported by the Federal Housing Finance Agency for Q2 2025) hesitate to move.
This lock-in persists as more than 81% of mortgaged homeowners hold rates below 6%, per Realtor.com data from August 2025. For instance, a $450,000 home purchased in 2020 at 3% yields a monthly payment of $1,518, compared with $2,158 at 6%. The disparity discourages large-scale seller entry, keeping inventory constrained nationally despite some monthly gains in 2025.
A targeted refinancing wave is anticipated among homeowners who bought during the 2023-2025 high-rate period. The Intercontinental Exchange’s December 2025 Mortgage Monitor indicates rate-and-term refinances comprised 62% of activity in October, the highest share in nearly five years, with 95% involving recent-origin loans averaging $505,000 balances and 762 credit scores. These borrowers stand to save substantially, averaging 0.92 percentage points lower rates and about $200 monthly.
Inventory challenges continue due to a buyer-seller disconnect. Sellers often withdraw listings or delay sales rather than accept offers below expectations, especially as homes take 50-70 days to sell. Active listings rose 15.3% year-over-year in October 2025 but remained 13% below 2017-2019 averages, per Realtor.com. This dynamic supports muted price growth without widespread declines. National forecasts include Zillow projecting 1.2% home value increase, Redfin around 1%, and others like Fannie Mae at 1.3% by year-end.
Homeowners will increasingly seek equity access alternatives amid record levels—$11.6 trillion tappable equity entering Q3 2025, per ICE data. Traditional cash-out refinances and HELOCs face hurdles like high credit standards (average FICO around 800 for HELOCs) and income verification. Home equity investments (HEIs) gain traction, providing lump-sum cash without monthly payments or stringent qualifications, though they involve sharing future appreciation. Originations are projected to exceed $2 billion in 2026, reflecting demand for flexible options.
Home sales are expected to rise modestly. Realtor.com and others forecast 3-4% increases to around 4.1-4.2 million existing-home transactions, with NAR predicting up to 14% growth. New construction may slow in some areas due to unsold inventory.
In Maryland, the market aligns with national trends but benefits from proximity to Washington, D.C., federal employment, and sectors like defense and biotech. Forecasts suggest moderate 2-4% appreciation in desirable areas, with rates in the high-5% to low-6% range improving affordability gradually. Southern Maryland communities, including those in Calvert, Charles, and St. Mary’s counties, face ongoing inventory constraints, supporting steady demand without sharp corrections. The state’s strong economic base and limited supply in transit-accessible or high-quality school districts contribute to resilience.
Homeowners navigating 2026 should evaluate long-term needs, considering improvements over moves given elevated rates. Those with recent high-rate loans may benefit from refinancing, while others explore HEIs for equity without added payments. Affordability gains remain incremental, requiring conservative planning in a market favoring well-timed, situation-specific decisions.