Housing Affordability in 2026: What This Year Means for Homebuyers

 Expect modest relief: lower mortgage rates and creeping inventory improvements create more opportunities. 

Several factors that influence housing affordability may begin to stabilize or improve in the coming year. That said, the housing market is inherently unpredictable, and no one can say with certainty what lies ahead.

Waiting to purchase in hopes that mortgage rates decline in 2026 carries its own risk. Rates could just as easily rise, making affordability even more challenging. A smart approach is to purchase when the numbers make sense for your budget and long-term plans. If rates decrease in the future, refinancing can always be an option, but waiting for the “perfect” moment may mean missing an opportunity that works today.

Key Factors Shaping Housing Affordability in 2026

Three forces determine how far your housing budget will stretch: borrowing costs, the number of homes for sale, and the mortgage structure you choose. Each affects monthly payment size, down‑payment needs, and your ability to compete in markets like San Diego.

Interest Rate Trends in 2026

Mortgage rates moved lower compared with the near‑peak years. That reduction can cut monthly payments by several hundred dollars on a typical mortgage, improving buying power for many households.

Expect rates to react to inflation reports and Federal Reserve guidance. A 0.25–0.75 percentage point swing in fixed rates will noticeably change what you can afford and whether refinancing makes sense for current homeowners.

If you plan to buy, compare 15‑ and 30‑year fixed options and consider rate‑buydown offers from sellers. Small rate differences translate to large lifetime interest costs, so run scenarios for payments, total interest, and break‑even time for any buydown.

Home Inventory

Inventory rose modestly in 2025 and early 2026 in many metro areas, easing competition in several price tiers. Where listings increased, you’ll often find more negotiation room, longer marketing times, and occasional price reductions.

Inventory remains uneven, coastal cities and high‑demand suburbs may still be tight. In places with low supply, you’ll face bidding pressure and faster sales, which pushes prices upward and narrows affordable options for buyers on fixed incomes.

To act efficiently, track active listings in your target neighborhoods and set alerts for price drops and days‑on‑market changes. Broaden search criteria or consider nearby neighborhoods to increase your odds without overstretching your budget.

Mortgage

Your mortgage choice shapes both upfront costs and long‑term affordability. Lower down‑payment programs reduce the cash you need at closing but increase monthly payments and may add mortgage insurance.

Adjustable‑rate mortgages (ARMs) can offer lower initial payments, which helps if you plan to sell or refinance within the fixed period. Fixed‑rate loans provide payment predictability, which benefits long‑term budgeting, especially if you expect income to remain stable.

Work with lenders who tailor options to your timeline and financial goals. Ask about rate buydowns, assist programs, and the full cost of points versus monthly savings so you can choose the combination that fits your cash flow and homeownership horizon.

Will home prices finally cool in 2026?

You should expect only modest relief, not a sharp drop. Economists forecast mortgage rates to ease in 2026, which will bring more buyers back into the market and put upward pressure on prices.

National forecasts suggest single-digit price growth is likely rather than large gains. If typical annual increases near the low single digits, median home values would rise a few percentage points from late-2025 levels, keeping many markets competitive.

Local dynamics will shape your outcome. Areas with tight supply and strong demand, such as desirable coastal and tech-heavy metros, will see smaller cooling or continued price gains. Conversely, markets with growing inventory or slower job growth may show more pronounced price moderation.

Watch two key indicators closely: mortgage rates and inventory. Falling rates increase buyer activity quickly, while rising listings are the main force that can bend prices downward. Monitor both to judge whether local affordability is improving for you.

Practical actions you can take now:

• Get preapproved to lock in options if rates move lower.

• Track active inventory and days-on-market in neighborhoods you’re targeting.

• Consider timing: modest national price increases still leave opportunities in specific neighborhoods or price tiers.

Home Buying Market in 2026

Mildly lower mortgage rates, more inventory in some regions, and persistent regional price gaps will shape how buyers move this year. You’ll need to weigh monthly payment savings against competition in markets where sales rebound and prices remain elevated.

First-Time Buyers in 2026

You may find monthly payments somewhat smaller if lenders trim average rates from recent peaks. That can make qualifying for a conventional mortgage easier and reduce the share of your income that goes to housing.

Still, expect pockets of tight competition where sellers list more homes and demand rises. In those neighborhoods, prices can climb and outbid buyers relying only on standard down payments. Consider programs that reduce upfront costs—state and local down-payment assistance, FHA options, and employer-assisted housing plans can increase your ability to compete.

Prepare documentation and get a preapproval letter before touring homes. Speed and certainty matter when inventory is limited and offers pile up.

How to navigate the 2026 housing market with confidence

Start by knowing the true monthly cost: principal, interest, taxes, insurance, HOA fees, and maintenance. Use that figure when comparing listings so you don’t overextend based on headline mortgage rates alone.

Work with a local agent who tracks recent sales, time-on-market, and seller concessions in the specific San Diego neighborhoods you target. In many coastal and desirable inland areas, comparables and competition differ block by block. Ask your agent for a data-driven offer strategy—escalation clauses, inspection contingencies, or earnest money adjustments—tailored to current conditions.

Lock a rate or choose a rate-buydown when you have funding certainty. That protects buying power if lenders raise pricing unexpectedly between offer and closing.

Strategies to boost buying power in a tight market

Increase your down payment to lower loan-to-value and improve lender terms. Even modestly larger down payments can reduce monthly obligations and strengthen your offer against all-cash buyers.

Pursue mortgage rate options such as adjustable-rate mortgages with initial lower payments if you plan to refinance later. Pair that with targeted seller concessions requests and a clean, fast-close offer to make your bid more attractive without overpaying.

If you’re looking to maximize your buying power in a competitive market, partnering with the right real estate team can make a meaningful difference.

An experienced agent doesn’t just guide you through tight inventory and multiple-offer situations; we advocate for you at every step. From crafting a compelling offer strategy to negotiating price, terms, credits, and timing, a skilled professional can uncover opportunities that align the property with your budget. In a fast-moving market, having a strategic advisor on your side can be the key to turning possibility into ownership.

Connect with The Comiskey Group today to create a strategic plan that positions you to compete confidently and purchase wisely in today’s market.