A 2026 Real Estate Forecast: Why the “Sleeping Giant” is Finally Waking Up

As we step into 2026, I have been reflecting on my monthly “Katy’s Bottom Line” monthly market snapshot posts. While it has traditionally been easy to interpret numbers from previous months, speculating on where we are headed in 2026 and beyond is proving much more challenging.

To better reflect the reality of our current landscape, we are transitioning our monthly market updates to a quarterly event rebranded as The Market in This Moment.

Hindsight is 20/20: Learning from the Past

We know with certainty what the past has taught us. The Great Recession’s mortgage and financial crises left many homeowners “upside down” due to subprime lending or job loss. While some lost homes to foreclosure or short sales, only a small handful could hold on for the years it took for values to recover.

The last ten years have been, by definition, a seller’s market. As foreclosed inventory was absorbed, we saw a steady shift toward scarcity. I now tell my buyer clients: In 2010, there were ten homes for every buyer; today, there are ten buyers for every home.

I now tell my buyer clients purchasing in today’s market that in 2010, there were ten homes for every buyer and today there are ten buyers for every home.

The Certainties of 2026: Data You Can Count On

While speculative “soothsaying” about the future is difficult, several facts about our current market are undeniable:

• The Inventory Crisis: We face a shortage of between 4 million and 5 million homes across the U.S., a deficit felt severely here in the Northeast. Stalled construction following the Great Recession, combined with pandemic pricing and interest rate spikes, has exacerbated this shortage—most keenly in the mid-to-lower price ranges.
• The Aging Buyer: In 2025, the median buyer age hit an all-time high of 59 years old, up from 56 the year prior.
• First-Time Buyer Barriers: The median age for first-time buyers rose to 40. Consequently, first-time buyers have decreased to just 21% of the market share—the lowest share since NAR began collecting data in 1981.
• Family Dynamics: A staggering 76% of recent buyers did not have a child under the age of 18 in their home.
• The Savings Gap: The average home buyer now saves for 7 years to purchase a home. While this is down from the pandemic peak of 12 years, it remains double the pre-pandemic timeframe.

Why “Waiting for Rates” Might Cost You

For the last two years, buyers have been a “sleeping giant,” waiting for increased inventory and lower rates. Many went into hibernation, causing competition to shrivel, days on market to increase, and price reductions to mount.

While it may seem counterintuitive to purchase while rates are in the 6–7.5% range, this has actually provided buyers with more bargaining power than they have seen in years. However, the giant is waking up. In the first weeks of 2026, I have seen hungry buyers ready to purchase. As demand rises in this low-inventory market, we will inevitably see prices surge again until supply meets demand.

While it may seem counter intuitive or uncomfortable to consider a purchase when the rates are in the 6-7.5% range (still below the historical average), it is actually an ideal time if the Buyer can afford the monthly payment.

Why Local Expertise Matters Now

In a market this complex, having an advocate is essential. National data shows that 88% of all buyers worked with a Realtor® last year. Beyond just finding a house, an experienced agent helps negotiate better terms, points out unnoticed property faults, and provides a vetted list of service providers.

National data shows that 88% of all buyers worked with a Realtor® last year.

At Homes By Connect, we are proud to lead with expertise and are committed to helping you navigate these shifts with realistic expectations and data-driven strategy. 2026 will have its challenges, but for those who understand the “Market in This Moment,” it remains a year of opportunity. Contact us today for expert advice and personalized support.

Data Points provided by the Rhode Island Association of Realtors®.

About the Author: Katy Donovan

Katy Donovan is the award-winning Broker/Owner of Homes By Connect and The Donovan Group  in Portsmouth, RI. With over 18 years of experience and the distinction of being named the 2025 NCBR Realtor® of the Year , Katy provides the deep local insight and “Market Snapshot” expertisethat her clients rely on.

A former educator, her guiding philosophy is that “An Informed Client is the HAPPIEST Client!”. As the brokerage celebrates its 5th Anniversary in March 2026, Katy continues to lead with a focus on community connection (Connect Cares) and mentoring a new generation of collaborative real estate professionals (Join Our Team).

Ready to navigate the market or interested in joining our award-winning team? Connect with Katy Donovan here.