Home Prstarts Could Dip in 22 U.S. Cities Next Year, Report Says

Market Outlook for 2026

The housing market remains challenging for potential buyers, with home prstarts approaching record highs and mortgage rates exceeding 6%. However, a new analysis from Realtor.com suggests a shift may occur in 2026, forecasting a decline in property prstarts in 22 of the 100 largest U.S. cities and a slight easing of mortgage rates.

According to Jake Krimmel, a senior economist at Realtor.com, the real estate market is anticipated to become more “buyer-friendly,” indicating the potential for the “most balanced housing market” experienced since the pandemic. He notes that neither buyers nor sellers are likely to dominate negotiations moving forward.

Mortgage Rates and Sales Projections

The average mortgage rate is predicted to drop to around 6.3% in 2026, down from 6.6% in 2025. Krimmel emphasizes that declining borrowing costs, coupled with strong wage growth, may encourage more buyers to enter the market. “2026 is going to be a year where we think the market is going to steady,” he said. The report estimates existing-home sales will increase by less than 2%, reaching approximately 4.13 million properties sold in 2026-a modest rise from the anticipated 4.07 million sales in 2025.

Zillow, another prominent online real estate marketplace, also supports this outlook, projecting nearly 4.3 million existing home sales for next year, representing a 4.3% increase compared to 2025. It adds that mortgage rates are likely to remain slightly above 6%, which, while higher than recent years, is considered modest from a historical perspective.

Cities Expected to Experience Prstart Declines

The analysis indicates that most of the cities where home prstarts are expected to decrease are concentrated in the Southeast and West. Notably, seven of Florida’s eight largest cities are projected to see prstart declines, with Miami being the exception. Cape Coral-Fort Lauderdale is expected to have the largest prstart reduction at 10.2%, followed by North Port-Sarasota-Bradenton at 8.9%.

Krimmel explains that these anticipated drops are connected to increases in housing inventory, which afford buyers more options. Additionally, some of these areas may experience a decrease in demand compared to the frenzy seen during the pandemic, a period characterized by low mortgage rates and shifts to work-from-home policies.

“These places, among others, saw a huge frenzy during the pandemic, so part of what we are projecting is that demand continuing to come back down to earth,” Krimmel noted.

Prstart Trends in Other Major Cities

While 22 cities are bracing for prstart declines, the remaining 78 of the largest U.S. cities are expected to experience modest prstart gains, averaging around 4%. These projections are based on an analysis of housing inventory, new construction, prstart growth, as well as wage growth and unemployment rates.

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This assessment sheds light on a potentially shifting landscape in the housing market, indicating a return to more typical conditions and offering both opportunities and challenges for buyers and sellers alike.