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

Industry forecasters see an improving landscape for home sales in 2026. (Joe Raedle/Getty Images)

Key Points

• National home prices increased by 1.4% in October, exceeding the previous month’s 1.3% rise and analyst expectations.
• Pending home sales rose 3.3% in November from October and were 2.6% higher than one year ago, marking the best performance in three years.
• Industry forecasts for 2026 existing-home sales vary, with predictions ranging from a 6.7% rise to a 14% gain.

Home prices rose more quickly than expected in October, according to S&P Cotality Case-Shiller Home Price Index data released today. But the bigger picture shows that housing costs continue to improve, with forecasters expecting a pickup in sales in 2026.

An index tracking prices in 20 of the nation’s largest metropolitan areas gained 1.3% in October, slower than the 1.4% increase one month prior but beating consensus estimates that called for a 1% increase, according to FactSet.

Home prices nationally increased 1.4% in the same time period, according to the data. The increase was greater than the prior month’s 1.3% increase.

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.

Investors shouldn’t read too much into the stronger-than-expected measurement. The continued slower pace of growth is a good sign for prospective buyers waiting for easing prices.

October’s results are among the weakest since mid-2023, Nicholas Godec, S&P Dow Jones Indices’ head of fixed income tradeables and commodities, said in a statement noting that price growth lags inflation. “In real terms, that gap implies a slight decline in inflation-adjusted home values over the past year,” he wrote.

Wages gains also help. While October’s lack of government data complicates the comparison, the gain is slower the 3.5% wage increase in November.

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.

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.

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.

Price changes were nearly evenly split between increases and decreases from one year prior. Of the cities in the index, prices increased the most in Chicago, up 5.8% from one year prior, and fell the most in Tampa, Fla., dropping 4.2%. Prices were Detroit were unavailable due to data collection issues.

Ten of the 19 metropolitan areas for which data was available—many in the sunbelt or northwestern U.S.—saw prices fall below year-ago levels. Behind Chicago, New York, Cleveland, and Boston saw the greatest price increases.

“The markets that were once ‘pandemic darlings’ are now seeing the sharpest corrections while more traditional metros continue to post modest gains,” Godec said.

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