A ‘new era’ in the housing market is about to begin as affordability finally improves ‘for the first time in a bunch of years,’ economist says

Compass chief economist Mike Simonsen says the housing market should shift by 2026 as sales begin to rise while prices are capped or modestly down, with incomes growing faster than prices and affordability improving even without a steep mortgage-rate decline. Indicators include a 47% year-over-year jump in listings withdrawn in June—interpreted as about 150,000 homeowners representing “shadow demand”—and an expectation that mortgage rates will remain in the low‑6% range, which could lift transactions without reigniting a price surge. Supporting data from Zillow show more than half of U.S. homes fell in value over the past year but owners still have a median 67% gain since their last sale, and buyers are securing record discounts (typical individual discounts of $10,000, cumulative cuts of $25,000 in October), helping relistings match buyer budgets and fueling the most active fall market in three years.

Analysis

Compass chief economist Mike Simonsen projects a meaningful shift in the U.S. housing market beginning next year, with sales starting to rise while prices are capped or modestly down as incomes grow faster than prices; Redfin similarly projects a “Great Housing Reset” in 2026. Simonsen expects mortgage rates to remain in the low-6% range, a level he argues will permit transaction growth without triggering an overheating price rally.

Market signals in the article support a rebalancing narrative: listing withdrawals jumped 47% year-over-year in June, which Simonsen characterizes as roughly 150,000 owner-occupied “shadow demand” households that may transact once conditions improve. Zillow data show more than half of U.S. homes fell in value over the past year but owners still have a median 67% gain since their last sale; typical individual buyer discounts are ~$10,000 and cumulative October price cuts reached $25,000, helping the most active fall market in three years.

Implications are twofold for market structure — increased inventory and price concessions should improve affordability and spur sales, but the supply-side dynamic is conditional because many sellers must buy as well as sell. A steep drop in rates remains the primary risk highlighted by Simonsen, since it could convert renewed demand into price pressure; conversely, a continued weak-demand environment would keep transactions muted despite discounts.

Key Decisions for Investors

• Consider modest incremental exposure to consumer-facing real-estate platforms and listings plays (e.g., Compass and Zillow) to capture higher transaction volumes if affordability-driven sales growth materializes,
• Monitor mortgage-rate trajectory (key trigger is whether rates hold in the low-6% range) alongside monthly delisting and cumulative price-cut data — materially lower rates or a reversal in discounts should prompt rebalancing of exposure,
• Size positions conservatively and maintain optionality because improvement is described as gradual and contingent; be prepared to hedge or reduce exposure if price cuts stall or a sudden rate drop reintroduces overheating risk