Buyers may catch a break in 2026, depending on what they are looking for. There are several factors that contribute to housing affordability that may ease up next year. Of course, no one can say exactly what the future of the housing market will look like.

If you delay buying a home to see if mortgage rates drop in 2026, you may risk rates rising to an unaffordable place. It is smart to get a mortgage and buy a home when you can afford to, and refinance your mortgage when rates drop.

What is housing affordability — and why it matters in 2026

Housing affordability references the relationship between housing costs, like rent or mortgage payments, and total household income.

Experts suggest that when figuring out if a home is affordable the maximum income a family should put toward rent or mortgage payments is 30%. Any more than that could put strain on the finances of a household.

To find out how much your mortgage payments would be, you can get pre-approved today!

The biggest factors shaping housing affordability in 2026

Three big factors that shape housing affordability are home inventory, income and the mortgage you choose.

When there is a greater home inventory, prices tend to drop to attract buyers. When home inventory is smaller, prices tend to increase. With home prices increasing, it can be harder to find and afford a home that fits your needs while staying on budget.

If your income is increasing with the rise of home prices, you won’t notice much change in housing affordability. If your income stays the same while the prices of homes increase, the amount of home you can afford without going over the suggested 30% could decrease somewhat.

When looking to choose a mortgage that will help make housing more affordable in 2026, finding the right lender can make all the difference. Rate’s Senior Vice President of Mortgage Lending, Kristin Dail, said, “The key is partnering with a lender who can match the mortgage to the buyer’s budget and strategy.”

Talking on the ways a buyer could expect to see a lender assisting them, Dail explained, “they can help craft a strategy that fits the buyer’s financial picture and long-term goals, whether that involves a rate buydown, lower down payment programs or adjustable terms.”

Will home prices finally cool in 2026?

With experts predicting that mortgage rates will drop and more potential buyers will join the housing market in 2026, home prices are predicted to rise slightly.

In its Nationwide Forecast, the National Association of REALTORS® (NAR) Chief Economist Lawrence Yun indicated home prices could increase up to 4% in 2026. With median existing home prices at $409,200 in November 2025, if the NAR’s predictions are correct, the median home price across the nation in 2026 could reach up to $425,568.

Will 2026 be easier for first-time homebuyers?

Depending on what you are looking for, there are some ways in which 2026 may be easier for first-time homebuyers.

If mortgage rates drop, first-time homebuyers could get a loans without having to spend as much on monthly payments. The potential lower monthly payments can make mortgages more affordable for first-time homebuyers.

The NAR also expects that more homes will be sold in 2026, which could mean there are more buyers in the housing market. More buyers tends to mean more competition and higher home prices to match. If these happen, it could make the 2026 housing market a little tougher for first-time homebuyers.

Strategies to boost buying power in a tight market

If you are looking to boost buying power in a tight market, one thing you could do is work with a real estate agent.

A real estate agent can not only help you navigate a tight market but also help negotiate a fair price for you. A professional real estate agent could help boost your buying power by working with sellers to help a property fit your budget.

How to navigate the 2026 housing market with confidence

To help you confidently navigate the housing market in 2026, you should consider getting a mortgage pre-approval.

A pre-approval for your mortgage can show you the terms and amount you will qualify for. This will let you plan your monthly expenses after buying a home as well as allowing you to just focus on looking at homes you could afford.

With the potential of more homebuyers on the market in 2026, a pre-approval can be shown to sellers when you find the perfect house for your situation. This means that you won’t need to wait for a lender to approve your mortgage and risk someone else making an offer on your dream home.

Start your pre-approval application today to get ready for the 2026 housing market.

Buying a home is one of the biggest purchases you’ll ever make. And homeowner’s insurance is what protects that investment. Think of it as your safety net. NerdWallet explains it:

• Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, it helps pay for repairs and possibly even a full rebuild, if that’s deemed necessary.
• Protects Your Belongings: It can also cover personal items like furniture, electronics, jewelry, and clothing if they’re stolen or damaged.
• Provides Liability Coverage: And, if someone gets injured on your property, your policy can help cover medical bills or legal expenses.

But that peace of mind does come with a cost, and lately those costs have been rising.

Why Home Insurance Premiums Are Going Up

There are a number of factors causing insurance premiums to rise today. But, in the simplest sense, here’s what’s driving prices up according to the Insurance Research Council (IRC).

Severe weather events and natural disasters are happening increasingly often, leading to more claims. At the same time, homebuilding materials and labor are more expensive. So, when it comes time to work on those claims, insurers have to manage higher costs to repair or rebuild the affected homes.

That combination adds up to higher premiums. You can see how it’s climbed recently in the graph below. Each bar marks the percentage increase in insurance costs for that calendar year.

The good news is, the annual pace of the increase may be starting to ease according to ResiClub and Cotality. By their count:

• In 2023 and 2024, insurance costs went up 14% a year.
• In 2025, they rose about 10%.
• And in 2026 and 2027, it’s expected to go up about 8% each year.

That’s still an increase, but at least the pace is slowing down. And here’s another silver lining.

While insurance costs are rising, mortgage rates are falling. And that can help offset some of this expense. As Michael Gaines, Senior VP of Capital Markets, Cardinal Financial, explains:

“Rising taxes and insurance do create pressure, but they don’t erase the benefits of a lower rate . . . A small rate improvement, paired with the right loan program and smart planning, can still make homeownership possible . . . It’s less about one factor canceling another out, and more about helping buyers layer the right solutions together.”

Costs Are Going To Be Different Depending on Where You Buy

So how much do you need to budget for this? It depends on the price point and location of house, the coverage you need, and more. And just like with everything else in real estate, costs vary by area.

You can get a rough idea of your state’s typical premiums in the map below:

So, What Can You Do About It?

Generally speaking, your first insurance payment will be wrapped into your closing costs. But after that, it’ll become a recurring expense. That’s why knowing these premiums are rising is so important. It helps you factor that into your budget, so you go in with a full picture of what you can comfortably afford.

If you’re crunching the numbers and trying to find other ways to save, here are a few tips from Insurify and NerdWallet that can help you get the best insurance price possible:

• Shop Around – Compare quotes from multiple companies.
• Bundle Policies – Combine home and auto for discounts.
• Ask About Discounts – Don’t miss out on savings you may qualify for.
• Highlight Upgrades – Features like a new roof or storm windows can cut costs.
• Improve Your Credit – A stronger credit score can mean better premiums.

Bottom Line

If you’re thinking about buying a home, don’t forget to plan ahead for your homeowner’s insurance.

While costs are rising, knowing what to expect and how to shop around can make a big difference as you’re budgeting for your purchase. Because this isn’t coverage you’ll want to skimp on. It’s your best protection for what’s likely your biggest investment.

There’s finally a little good news for anyone who’s been priced out or sitting on the sidelines.

Buying a home is getting more affordable.

Monthly payments have started to come down, and the squeeze buyers have been feeling for the past few years is slowly loosening. Now, that doesn’t mean everyone can suddenly afford a home, but with how tough the market’s been, the improvement we’re seeing matters.

Affordability Is Finally Moving in the Right Direction

One of the best ways to see this shift is by looking at how much of a household’s income it takes to buy a home.

According to Zillow, housing is typically considered affordable when it takes 30% or less of your monthly income to cover your expenses. That includes your mortgage payment, taxes, insurance, and basic maintenance.

For the past few years, the math was well above that threshold, and it made buying a home unachievable for many. But now, we’re slowly moving back toward a balance. Zillow research shows it’s taking less of a typical household’s income to buy a home than it did just a few years ago (see graph below):

Now, we’re not all the way back to Zillow’s threshold of 30% of your income or less, so affordability is still tight. But things are trending in the right direction.

Why Affordability Is Improving

So, what’s driving the change? A lot of the focus lately has been on mortgage rates and how much they’ve come down over the course of the past year. But that’s not the only factor working in favor of buyers right now. Here are three trends benefiting buyers today:

1. Mortgage rates have eased. Rates are near their lowest level in more than three years, which helps lower monthly payments (see graph below):

2. Home price growth has cooled. Prices aren’t falling nationally, but they’re growing much more slowly than they were a few years ago. That means buyers today aren’t facing the same sharp jumps in purchase prices, which helps keep monthly payments more manageable – and buying more predictable.

3. Wages are growing faster than home prices. This one matters a lot. As Mark Fleming, Chief Economist at First American, explains:

“When income growth exceeds house price growth, house-buying power improves—even if mortgage rates don’t decline meaningfully.”

None of this makes buying cheap, but it does explain why the math is starting to work a little better for buyers than it did even a just a year ago. Put simply, the forces that hurt affordability over the past few years are finally easing. Fleming again explains it well:

“Affordability remains challenging, but for the first time in several years, the underlying forces are finally aligned toward gradual improvement. Mortgage rates may drift down only slowly, but income growth exceeding house price appreciation will provide a boost to house-buying power — even in a higher-rate world. Affordability won’t snap back overnight, but like a ship finally catching a steady tailwind, it’s now sailing in the right direction.”

These three factors combined are why economists expect affordability to keep improving in 2026.

Where Homes Are Becoming Affordable First

But how much is affordability really going to improve? In some places, noticeably. Zillow says some markets are expected to fall back under their affordability threshold (30% of your income or less) by the end of the year:

But that doesn’t mean you have to be in one of these markets or wait until year-end to buy. Other places are already seeing big improvements in affordability. So, talk to a local agent about what’s happening in your market. You may find you’re able to buy after all.

Bottom Line

For the first time in quite a whole, affordability is easing. That’s a meaningful shift.

And because this improvement isn’t happening everywhere at the same speed, understanding what’s changing locally is what really makes a difference. If you want to see how these trends show up in your area, talk with us today!