2026 Housing Market Forecast: Lower Mortgage Rates and Rising Home Sales
OHA Market Update Series - Feb 4, 2026
Local: Austin is considering a Green Social Housing policy that would have the city directly develop and partly own mixed-income, sustainable multifamily projects, aiming to provide long-term affordability and support workers during slower market cycles. While it offers a potential solution to Austin’s housing challenges, concerns remain around financing, project feasibility, and balancing regulations with market realities.
National: 2026 is shaping up to be an exciting year for the housing market, with lower mortgage rates and slowly improving inventory likely driving a double-digit rebound in home sales. Buyers—especially first-timers in affordable regions—will find more opportunities, while sellers who price strategically can still navigate a competitive market.
Intrigued? Keep reading.
(4 minute read)
Austin Area Real Estate & Community Update:
Market Trends, Local News, and Neighborhood Insights
Austin’s New Housing Conversation: What “Green Social Housing” Could Mean for Our City
If you’ve been anywhere near Austin real estate over the past few years, you already know this: housing affordability isn’t a future problem—it’s a right-now one. And last week, Austin City Council put a new idea on the table that could meaningfully change how our city approaches housing long-term.
Austin is considering adopting a Green Social Housing policy, a move that would make the city more directly involved in developing and owning multifamily housing—particularly during slower market cycles like the one we’re in now.
So what does that actually mean, and why does it matter?
Let’s break it down.
What is Green Social Housing?
At its core, social housing means the public sector plays a direct role in housing development—either by owning part of a project, financing it, or both. These developments are typically mixed-income: some units rent at market rates, while others are reserved at lower, more affordable rates.
Austin’s version would be “green” social housing, meaning projects would also need to meet sustainability standards—think energy efficiency, water conservation, healthier indoor living, and long-term utility savings.
The proposal would create a housing production fund, with the city acting as a majority owner of certain projects. That ownership structure could unlock tax advantages and allow the city to take a longer-term view than private developers often can.
Why this is coming up now
Timing matters here.
Austin’s multifamily market is in a pause:
Apartment deliveries are projected to drop sharply this year
Vacancy rates are hovering around 10%
Rents are down year-over-year
Many lenders are hesitant to fund new projects
In short: private developers are sitting on the sidelines.
Supporters of this policy argue that this is exactly when the public sector should step in—continuing to build during downturns so we’re not playing catch-up when demand rises again. This idea is called counter-cyclical development, and it’s one of the strongest arguments in favor of social housing models.
If done well, it could mean:
Locking in affordability before the next growth surge
Keeping construction jobs moving
Preventing future supply shortages
Who is this meant to help?
One of the most compelling points raised by city leaders is about Austin’s workforce.
We have thousands of people building our roads, expanding the airport, staffing hospitals, teaching schools, and keeping the city running—yet many can’t afford to live here. The goal of Green Social Housing is to create long-term housing options for those workers within the city they’re helping grow.
That’s a conversation Austin has been dancing around for years—and this is one of the more direct attempts to address it.
The concerns (and they’re valid)
Not everyone is on board—and that’s worth paying attention to.
Industry groups have raised concerns about:
How the housing fund would be initially financed, especially given Austin’s current budget constraints
Whether added requirements (green standards, wage rules, rent controls, eviction limits) could make projects financially unworkable
The risk of piling on so many rules that projects become too expensive to succeed—a real phenomenon often called the “Christmas tree effect”
There’s also a fair question of whether the city should focus on improving existing affordable housing programs rather than creating a brand-new model.
Even supporters acknowledge this isn’t a silver bullet. Each project would need to stand on its own, and early test cases would matter a lot.
My take
From where I sit—as someone who works daily with buyers, sellers, renters, and developers—this proposal feels less like a radical shift and more like an experiment born out of necessity.
Austin has tried doing nothing.
Austin has tried incentives.
Austin has tried rapid private development.
And yet affordability keeps slipping further out of reach for many.
Green Social Housing won’t magically fix everything. But if it’s structured carefully, staffed with experienced operators, and allowed to evolve based on real results—not politics—it could become a meaningful tool in Austin’s housing toolbox.
The key will be balance:
Ambitious, but financially realistic
Sustainable, but not overburdened
Worker-focused, without discouraging private participation
I’ll be watching closely as this moves forward—and I expect it will spark some of the most important housing conversations Austin has had in years.
If you’re curious how this could impact home values, rental supply, or future development patterns in your neighborhood, I’m always happy to talk it through.
National Real Estate Update
Housing Trends, Interest Rates, and Market Forecasts
Why 2026 Could Be a Breakout Year for Home Buyers
If you’ve been watching the housing market, you know it’s been a wild ride over the past couple of years. Rising home prices, tight inventory, and higher mortgage rates made it tough for many buyers to jump in. But looking ahead to 2026, the market is showing signs that could make next year a really exciting one for both buyers and sellers.
Mortgage rates have already started easing from their peak earlier this year, and economists expect them to stay more manageable as we head into 2026. Lower rates, combined with decelerating rents, mean more buyers are likely to re-enter the market—and that could translate into a measurable uptick in home sales. In fact, the National Association of REALTORS® predicts a double-digit rebound in sales next year, up about 14% from 2025. That’s a big deal after a relatively stagnant 2025.
Home prices are expected to remain strong, with NAR projecting a 4% increase in median prices in 2026. Inventory is slowly improving, but markets with the tightest supply will continue to see price pressure. At the same time, distressed sales—foreclosures and short sales—remain incredibly low, keeping competition high for move-in-ready homes.
First-time buyers are also likely to benefit from these trends, especially in markets with more affordable inventory. While historically they’ve represented about 40% of buyers, last year that number dipped. But early signs show a rebound as more entry-level homes become accessible and mortgage rates remain attractive. Location will still matter—affordable inventory in the Midwest and South is giving first-time buyers a better chance to enter the market, while supply-constrained areas in the Northeast and West will be more challenging.
For sellers, 2026 will still require strategy. Homes may spend slightly more time on the market compared to the frenzied pace we’ve seen in past years, so pricing correctly will be critical. In competitive markets, multiple offers will continue, while in slower areas, a well-timed price adjustment could make all the difference.
Bottom line: 2026 looks like a year of opportunity. Lower mortgage rates and gradually improving inventory set the stage for more buyers to enter the market, while sellers who understand pricing and timing will be well-positioned.
Whether you’re buying, selling, or just planning ahead, now is a great time to start thinking about your next move.
Jennifer Carey
Realtor and Agent Success Manager at Open House Austin, real estate investor, and renovation enthusiast with Wimberley Airbnbs. I love mid-century modern design, hiking Austin with my dogs, yoga and pilates, and have been enjoying gardening at my home in East Austin🎶✨
