Home Prices Rise as the Year Draws to a Close. What to Expect in 2026.

Industry forecasters largely see an improving landscape for home sales ahead. (Joe Raedle/Getty Images)

Key Points

• Home prices likely rose 1% in October, the slowest annual gain since mid-2023, with wages increasing faster than prices.
• Pending home sales increased 3.3% in November from October and were 2.6% higher than one year ago.
• Industry forecasts for 2026 home sales vary, with predictions ranging from a slight rise to a 14% gain.

Home prices likely rose 1% in October, according to estimates for a closely watched index. A continuing slower pace of growth would be a good sign for prospective buyers waiting for easing prices.

Home sales are expected to improve in 2026, according to industry forecasts. But after three straight years of depressed sales, it will be a long, slow road back to a more typical level—and industry forecasters don’t agree on the route.

Economists expect that the S&P Cotality Case-Shiller index measuring home prices in 20 large U.S. metropolitan areas increased 1% from the year prior in October. If that pans out, it will be the slowest annual gain since mid-2023. The data is expected on Tuesday morning.

It would also mark another month of home prices rising slower than wages. While October’s lack of government data complicates the comparison, the expected gain would be slower the 3.5% gain in November.

The Case-Shiller measure lags behind others, but is favored because of its methodology, which is designed to minimize the kinds of price distortions that can be caused by differences in size, type, and other characteristics of a house.

Wages increasing faster than prices could give buyers a little breathing room in a long-hostile housing market. “Improving housing affordability—driven by lower mortgage rates and wage growth rising faster than home prices—is helping buyers test the market,” Lawrence Yun, the National Association of Realtors’ chief economist, said in a recent statement.

Pending home sales, a leading measure of future closed sales based on contract signings published by the trade group, rose 3.3% in November from October and was 2.6% higher than one year ago. It was the best seasonally adjusted performance in about three years, Yun said Monday.

Industry forecasters largely see an improving landscape for home sales ahead—though they don’t agree on the route there.

The Mortgage Bankers Association is calling for a 6.7% rise in existing-home sales as mortgage rates hover around recent levels and prices dip 0.3%, while the National Association of Realtors foresees a 14% gain in sales as prices rise 4% and mortgage rates fall to around 6%.

Even if the Realtor group’s call for a 14% increase in sales comes to pass, it will still fall short of a more normal rate for home sales, Yun previously said.

A panel of 83 industry economists, analysts, and other experts surveyed by Fannie Mae and Pulsenomics in the fourth quarter expect existing-home sales to rise to a median 4.2 million pace in 2026. That would mark an improvement from 2023 and 2024’s totals, and 2025’s likely rate, but would still be lower than the total before the pandemic.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com