The 2026 Housing Outlook

Where is the Orange County housing market headed next? The short answer: the market is stabilizing—but strategy matters more than ever.

After years of volatility driven by interest rates and limited inventory, we’re entering a more nuanced phase. Buyers and sellers who understand the landscape—and act with intention—will have the advantage.

A Look Back at 2025: More Choices, Slower Pace

In 2025, Orange County saw its highest housing inventory since 2019. While supply increased, it still remained below pre-pandemic norms. Demand, however, stayed muted, and homes took longer to sell.

As seller competition increased, one thing became clear: pricing and presentation were no longer optional—they were essential. Homes that were positioned correctly sold. Those that weren’t, lingered.

The Luxury Market: A Standout Performer

Luxury homes told a different story. Sales above $2.5M reached a new record in 2025, outperforming the broader market.

Even with longer market times at higher price points, luxury demand remained resilient. This reinforces what savvy sellers already know: well-positioned luxury properties still attract serious buyers, even in a shifting market.

In 2026, Rates Will Set the Tone

Looking ahead, mortgage rates will be the single biggest driver of market activity.

Inventory has been growing annually since 2023 as homeowners grow tired of waiting to make a move. Lower interest rates will encourage even more sellers to list—and bring more buyers back into the market as affordability improves.

Most 2026 forecasts suggest mortgage rates will land somewhere between the high 5% range and the mid-6% range, depending on economic conditions. According to Steven Thomas of Reports on Housing, the market is essentially facing three possible scenarios in 2026:

🚪 Door #1 (Base Case) A weak labor market with slowly rising inflation • Mortgage rates between 6%–6.49% • Home values rising 2%–5% annually

🚪 Door #2 (Second Most Likely Case) Significant negative job numbers • Mortgage rates dropping to 5.75%–5.9% • Home values rising 6%–6.49% annually

🚪 Door #3 (Least Likely Case) A stronger-than-expected labor market • Mortgage rates staying above 6.5% • Home values declining 1%–3% annually

What This Means for You

Whether you’re thinking about selling, buying, or simply planning your next move, success in 2026 will depend on timing, pricing, and a strategy tailored to your specific goals and neighborhood.

If you’d like to understand how economic conditions impact your home’s value, your buying power, or your long-term plans, I’m happy to help. A quick conversation can bring clarity and confidence in a market that rewards informed decisions.

Let’s connect and talk about what 2026 could mean for you.