Housing Market Shift: Affordability Improves After Years of Stagnation

A Shift in the Housing Market: Affordability Improves for the First Time in Years According to Mike Simonsen, chief economist at Compass, a top residential real estate brokerage, the housing market is on the cusp of a significant shift. After years of stagnant sales and unaffordable conditions, Simonsen predicts that 2026 will mark a turning point, with affordability finally improving for house hunters. The catalyst for this change is a combination of rising incomes and weakening home prices. Simonsen noted that incomes are growing faster than prices, making homes more affordable for potential buyers. This trend is expected to continue in 2026, with sales starting to move higher while prices are capped or even declining. Redfin, a leading real estate brokerage, has also predicted a "Great Housing Reset" in 2026, citing stronger income growth and weaker home prices as key drivers. This shift in the market narrative is a welcome development for would-be buyers who have been discouraged by unaffordable conditions and have cooled demand. The numbers tell the story. According to Redfin, the median home price in the United States has been rising at a slower rate over the past year, from 15.4% in 2021 to 4.2% in 2025. Meanwhile, wages have been growing at a faster pace, with average hourly earnings increasing by 5.5% over the past year. This shift in the market has significant implications for the real estate industry. As prices become more favorable, sales are expected to pick up, benefiting companies like Compass and Redfin. Additionally, the improving affordability will also have a positive impact on the broader economy, as more people will be able to purchase homes and participate in the housing market. Compass, which is one of the largest residential real estate brokerages in the United States, has seen significant growth in recent years. The company has expanded its operations to over 200 markets across the country and has a strong presence in major cities like New York and Los Angeles. With the improving affordability, Compass is well-positioned to benefit from the expected increase in sales. The industry as a whole is also expected to benefit from the shift in the market. According to a recent report by the National Association of Realtors, the housing market is expected to see a significant increase in sales in 2026, with a projected 5.5% growth in existing home sales. In conclusion, the housing market is on the cusp of a significant shift, with affordability finally improving for house hunters. The combination of rising incomes and weakening home prices is expected to drive sales higher while keeping prices in check. As the market narrative changes, companies like Compass and Redfin are well-positioned to benefit from the expected increase in sales, and the broader economy is expected to see a positive impact from the improving affordability.