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3 Trends to Watch Out for During the 2026 Spring Homebuying Season
By Leslie Cook MONEY RESEARCH COLLECTIVE
Lower rates and rising supply help buyers, but economic risks threaten a fragile housing recovery.
The busiest time of year for home sales just started, and would-be homebuyers are seeing an improved market this spring — although it may not be as good as they had hoped.
By the end of February, homebuying conditions had improved significantly from midsummer, when rates hovered close to 7% and affordability was tight. Mortgage rates were trending lower, breaking below the 6% mark for the first time since 2022. More homes were being listed, home price growth was slowing and wage growth was outpacing inflation. All of these factors helped improve affordability. A recent study by financial services company First American found that homebuying power — meaning the maximum price the average American can afford — surpassed the national median home price for the first time in more than three years.
The combination of these elements is a sign that the market is normalizing, although it hasn’t fully recovered, according to Odeta Kushi, deputy chief economist at First American.
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In the past month, however, pitfalls have appeared on the horizon. Continued progress toward an even more affordable housing market could be put in jeopardy by the ongoing war in Iran and its effect on oil prices: Rising costs are sparking fears of inflation and putting upward pressure on 10-year Treasury yields. Mortgage rates, which tend to follow these yield movements, are also rising. As a result of that pressure, mortgage rates have increased by half a percentage point and are currently averaging close to 6.5%.
The war has also raised economic concerns about the potential for higher inflation and a slowing labor market, which could strain household budgets and cause some homebuyers to put their plans on hold.
Despite these headwinds, however, there is guarded optimism for the spring buying season. Brett Sikora, founder and CEO of Align Real Estate Solutions, says that there is still pent-up buyer demand and that, in spite of worries about the economy, “folks are still very confident in owning real estate.”
Here’s what buyers and sellers looking ahead to the next few months can expect from an unsettled homebuying season.
Mortgage rates are lower
Mortgage rates may be higher than they were in February, but they remain lower than they were a year ago.
As of April 2, Freddie Mac’s benchmark rate for a 30-year fixed-rate loan averaged 6.46%, compared to 6.64%. The rate difference is enough to lower the monthly mortgage payment on a $400,000 home by a little more than $50 per month, which could make the difference for some buyers already on the edge of affordability.
If rates resume the downward trend seen earlier this year, as industry experts anticipate will happen once the conflict in the Middle East ends, those monthly savings will also improve, providing buyers with more access to the market.
Inventory is rising
Inventory is up compared to a year ago. According to listing site Zillow, there was a 4.2-month supply of homes actively on the market in March.
More supply positively impacts affordability in two ways. First, it helps keep home prices from rising too quickly and outpacing the neighborhood’s true market value. Second, it reduces competition for available homes, which means buyers have more time to view more homes, put together an offer and negotiate the sale.
Keep in mind, however, that inventory is rising faster in some cities while remaining tight in others. In areas where inventory isn’t increasing as quickly, home prices tend to rise faster and competition among buyers remains strong.
Home prices are stabilizing
Home price growth has recently slowed down considerably. Values have increased by less than 1% year-over-year, according to several different data sources. By contrast, annual price growth averaged over 6% over the last decade.
According to Zillow, the typical home costs $365,545 and has an average mortgage payment of $1,789, excluding insurance and taxes and assuming a 20% down payment. That’s 4.4% lower than the average monthly payment a year ago.
However, some areas in the U.S. are seeing prices rise faster due to a scarcity of homes for sale and strong buyer demand. Cities in the Northeast and Midwest are seeing prices continue to increase at a faster pace, while those in the South and West are seeing smaller gains. Some cities where supply is at or above pre-pandemic levels are even seeing price drops.
The overall effect of all these factors is improved affordability. Lower rates, more supply and slowing home price growth — combined with higher earned wages — mean that homebuyers have more purchasing power this year, Kushi says.
“[It’s] simply a function of the fundamentals being a little bit better this year as [they] relate to affordability,” she adds.
For buyers seeking to take advantage of these improved conditions, Sikora recommends ensuring they are financially prepared and working with real estate professionals to guide them correctly through the whole process.
“We’re in a market where you need to be very cautious,” Sikora says. “You have to have the right folks around you to get to the closing table, whether you’re a buyer or seller.”
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Leslie Cook is Money's lead real estate editor, covering news stories about mortgages and how rate movements affect the housing market and writing and editing stories that inform our readers about real estate trends and how they affect homebuyers and sellers. Leslie writes a weekly newsletter, Money Moves, that covers a wide range of real estate topics in addition to her weekly articles. Her work has been featured on Apple News, MSN and ConsumersAdvocate.org. Leslie has been covering the mortgage and real estate industry at Money since 2019 and has interviewed industry leaders, such as Lawrence Yun, chief economist at the National Association of Realtors, and Glenn Kelman, CEO of brokerage Redfin. She has been a guest on the This Morning with Gordon Deal radio show, interviewed by The Mortgage Note, and served as moderator for ServiceLink’s State of Homebuying webinar. While at Money, Leslie has contributed to several of Money’s rating and ranking features, including Best Places to Live, Best Places to Travel and Changemakers. She has also played a major role in researching and selecting Money’s Best Banks rankings for the past four years. Before joining Money as a staff writer, Leslie was a reporter for Caribbean Business Newspaper in San Juan, Puerto Rico, covering human resources, telecommunications and computers. She graduated cum laude from Bryn Mawr College in Pennsylvania with a bachelor’s degree in history. The research and interviewing skills learned there have contributed to Leslie’s ability to provide accurate information on her area of expertise and elicit informative responses from her interviewees.