Mike Simonsen, Chief Economist at Compass and Founder of Altos Research – 2026 Housing Market Forecast: Inventory Growth and Improving Affordability

What’s changing heading into 2026

For the past few years, home sales stayed low while prices kept rising. That made affordability worse. In the Compass 2026 outlook, that pattern starts to shift. More homes are available for sale in many areas. That gives the market more room to function.

Why affordability may improve

The forecast points to a simple driver: incomes are rising faster than home prices. When that happens, affordability improves little by little. One basic metric is the price-to-income ratio. Compass expects that ratio to move below five in 2026. That is still higher than long-term norms, but it’s better than the peak years.

Home prices: mostly flat, down in some markets

Compass expects national home prices to be close to flat in 2026, around a 0.5% increase on average. That average includes many markets that could be slightly negative. In other words, the forecast is not calling for broad price growth. It also is not calling for a national crash.

Inventory is the key factor

Inventory and price growth tend to move in opposite directions. When inventory rises, price growth usually slows later. The forecast leans on that relationship. More supply today can lead to flatter prices later.

Home sales could pick up

Compass expects existing home sales to grow by about 4–5% in 2026. More listings help, but so does rate stability. Buyers and sellers often respond more to rate changes than to the exact rate level. If rates stay steady in the low 6% range, more people may act.

The lock-in effect is easing

The “lock-in” effect is not gone, but it is weakening over time. More homeowners now have mortgages above 6% than a few years ago. Those owners tend to move more often than owners with very low rates. That can add supply and support more transactions.

What this can mean for Puget Sound

For King, Pierce, and Snohomish counties, the big takeaway is balance. More inventory and slower price growth can reduce pressure on buyers. Sellers may still do well, but pricing and preparation matter more in a flatter market. The best read will still come from neighborhood-level data, since conditions can vary block by block.

Here’s the link to the podcast with Mike Simonsen and HousingWire.