A Tale of Two Markets: Housing's 2026 Thaw and AI's Gilded Age

NEW YORK, NY – December 11, 2025 – After years of being frozen in place by soaring prices and prohibitive mortgage rates, the U.S. housing market is showing signs of a significant thaw. A new forecast from Compass, the nation's largest residential real estate brokerage, projects that 2026 will usher in the most balanced market in years, potentially ending the "Great Stay" that has kept millions of Americans from moving. But beneath this national forecast of stability lies a more complex reality: a market diverging into two distinct tracks, one offering modest relief for the average buyer and another, supercharged by tech wealth, where the luxury segment continues to boom.

In its inaugural Housing Market Outlook, the tech-enabled brokerage lays out a vision for a market recalibrating from its post-pandemic extremes. "The market is shifting toward a new era where incomes rise faster than home prices and the deep freeze of the last few years begins to thaw," said Compass Chief Economist Mike Simonsen. This shift, driven by a trifecta of flattening prices, rising inventory, and wage growth that finally outpaces housing costs, could unlock pent-up demand and bring long-delayed buyers and sellers back to the table.

A New Era of Affordability?

The cornerstone of the 2026 forecast is a gradual return to affordability. Compass projects a mere +0.5% growth in national home prices, a stark departure from the double-digit surges that defined the early 2020s. This prediction aligns with a broader consensus, though figures vary. Zillow forecasts a modest 1.2% rise, while Realtor.com anticipates a 2.2% increase. This slowdown is critical; for the first time in years, wage growth is expected to eclipse home price appreciation, giving household budgets much-needed breathing room.

Mortgage rates, the primary villain in the recent housing affordability crisis, are also expected to stabilize. Compass forecasts rates to average around 6.4%, trading within a more manageable range of 5.9% to 6.9%. This is echoed by the Mortgage Bankers Association and Redfin, which both see rates in the low-to-mid 6% range. While not a return to the historic lows of the pandemic, this stability removes a significant layer of volatility and allows buyers to plan with greater confidence.

This combination of factors is projected to boost activity. Compass sees existing home sales rising by 5% to 4.25 million, while Zillow projects a similar 4.3% increase. For businesses, this signals a potential unsticking of the labor market, as employees gain the flexibility to relocate for new opportunities. For aspiring homeowners, particularly first-time buyers who were priced out, it represents a glimmer of hope—a chance to finally enter the market without facing brutal bidding wars and runaway price escalations.

Beyond the National Average: A Tale of Two Markets

While the national picture suggests a gentle rebalancing, the on-the-ground reality for buyers and sellers in 2026 will be anything but uniform. The Compass report, along with analysis from other industry experts, points to a sharp divergence between regions and market segments. The story of 2026 is not one of a single market, but a tale of two distinct housing economies.

On one side are the so-called "refuge markets" of the Northeast and Midwest. Cities like Hartford, Connecticut, and Rochester, New York, are poised to lead the nation in combined sales and price growth, according to Realtor.com. These areas, which did not experience the same meteoric price run-ups as other regions, now offer relative affordability and value. They are becoming magnets for buyers relocating from high-cost coastal hubs, a trend sustained by the persistence of remote and hybrid work. Crucially, these markets also suffer less from the "mortgage lock-in" effect, as the gap between existing and new mortgage rates is less extreme, encouraging more homeowners to list their properties.

In stark contrast are some Sun Belt markets that were darlings of the pandemic boom. Areas in Florida and Texas, which saw a massive influx of new residents and speculative investment, are now grappling with persistent excess inventory, leading to price dips in 2025 that could continue to moderate the market. This regional fragmentation means that a homebuyer’s experience in Columbus, Ohio—identified by the National Association of Realtors (NAR) as a 2026 "hot spot"—will be fundamentally different from that of someone shopping in Miami. National averages, it seems, are becoming increasingly irrelevant for making informed local decisions.

The Luxury Segment's AI-Fueled Resilience

The most dramatic divergence, however, is between the mainstream market and its luxury counterpart. While the broader market aims for stability, the high-end segment—defined as transactions over $1 million—is projected to continue its powerful outperformance. This is where the intersection of technology, wealth, and real estate becomes most apparent.

Compass's outlook explicitly notes that as "AI-driven equities have fueled a surge in wealth creation," the luxury housing tier has become a standout source of strength. Affluent buyers in this category are largely insulated from the interest rate pressures that constrain the rest of the market. They are more likely to make all-cash offers, and their purchasing power is directly tied to the performance of their investment portfolios, which have benefited enormously from the recent boom in technology and artificial intelligence stocks.

This isn't just speculation. NAR data shows that sales of properties in the $750,000 to $1 million range have seen the largest gains, and Compass's own data reveals that nearly half of its high-end "Coming Soon" listings are for properties over $1 million. The wealth generated in the digital economy is being converted into tangible, high-value assets, and luxury real estate is a prime beneficiary. This trend creates a gilded market operating on a different set of rules, driven by asset appreciation rather than wage growth. For businesses that cater to high-net-worth individuals, from wealth management to bespoke construction, this segment remains a vibrant and growing opportunity. It also highlights how innovation in one sector—AI—can have profound and unequal ripple effects across the entire economy, right down to the foundations of the housing market.

Unlocking Mobility and the Future of Work

Ultimately, the predicted "Great Thaw" of 2026 carries implications far beyond housing statistics. A more fluid real estate market is a prerequisite for a dynamic labor market. For the past several years, the mortgage lock-in effect has kept employees tethered to their existing homes and, by extension, their local job markets. A homeowner with a 3% mortgage has had a powerful financial disincentive to sell and move for a new job if it meant taking on a new loan at 7%.

As rates stabilize in a lower range and more inventory comes online—Compass projects a 10% national increase—this golden handcuff begins to loosen. The return of American mobility means companies may find it easier to recruit talent from a wider geographic pool. It allows families to relocate for better schools, to be closer to relatives, or to simply right-size their living situations—all decisions that have been on hold for years.

The transition to a more balanced, albeit fragmented, housing landscape in 2026 will not be a sudden snap back to a pre-pandemic "normal." Instead, it marks the beginning of a new phase defined by more sustainable growth, regional disparities, and the undeniable influence of tech-generated wealth on the upper echelons of the market. For businesses, investors, and individuals alike, navigating this evolving terrain will require a nuanced understanding that looks past the national headlines to the divergent realities taking shape across the country.