If you’ve been watching mortgage rates, inventory numbers, or home prices over the past few years, you already know the market has been rough on buyers. Rates climbed fast, inventory dried up, and prices kept rising even as fewer people could afford to buy. Housing affordability in 2026 is starting to shift in a better direction. Not dramatically, and not overnight, but the numbers are trending the right way.
The question most people have right now is whether the shift is big enough to act on. That depends on where you live, what you’re buying, and how long you’re willing to wait.
Mortgage rates are cooling off
Rates on a 30-year fixed mortgage sit in the low-to-mid 6% range right now. That’s down almost a full percentage point from the highs we saw in 2023 and 2024, and most forecasts expect them to average around 6.3% through the rest of the year.
That’s still well above the 3% range that buyers got used to during the pandemic. But it’s a meaningful drop in monthly payment terms. On a $350,000 loan, the difference between a 7.2% rate and a 6.3% rate works out to roughly $220 per month. Over 30 years, that’s close to $80,000 in savings.
For sellers, lower rates matter because they bring more buyers into the market. When monthly payments drop, more people qualify for mortgages, and more qualified buyers means more competition for your listing.
More homes are hitting the market
Inventory grew about 15% in 2025, and forecasts call for another 8-9% increase this year. That’s a significant shift after several years where listings were scarce and buyers had to compete aggressively for whatever came available.
More supply means buyers have more options and more leverage. You’re less likely to face a bidding war, and you have more room to negotiate on price, repairs, or closing costs.
If you’re selling, this doesn’t mean the market has turned against you. Homes that are priced right and show well are still selling. But the days of listing high and expecting multiple offers within 48 hours are mostly behind us. Pricing strategy and presentation matter more now than they have in years.
Price growth is flattening out
National forecasts put home price appreciation somewhere between 0.5% and 2.2% for 2026. Compare that to the double-digit increases we saw during the pandemic years, and it’s clear the market is settling into something more sustainable.
For buyers, slower price growth means you’re not racing against a moving target. Every month you spend house-hunting, prices aren’t jumping thousands of dollars ahead of you. That breathing room changes the buying psychology from “grab whatever you can” to “find the right fit.”
For sellers, moderate appreciation means your equity is still growing, just not at the pace you may have gotten used to. If you’ve been in your home for several years, you’ve likely built solid equity regardless of the slowdown.
Why affordability is improving in 2026
One of the more encouraging data points this year: household incomes are projected to grow 3.6% to 4%, while home prices grow only 1% to 2.2%. That gap matters. When wages outpace home prices, buying power improves even if mortgage rates hold steady.
This is particularly good news for first-time buyers who’ve been priced out over the last few years. The math is slowly getting better, month by month.
That said, nobody should expect a return to 2019-level affordability anytime soon. Getting back to those levels would require mortgage rates around 2.65%, household income increases of 56%, or home price drops of 35%. None of those are realistic in the near term. The improvement is real, but it’s incremental.
Home sales are picking up
Overall home sales are expected to rise about 3% this year compared to 2025. That’s not a boom, but it’s a recovery from what were historically slow transaction volumes.
More sales activity generally signals a healthier market. Homes are spending less time sitting unsold, and both buyers and sellers are more willing to transact as conditions stabilize.
What this means for Memphis, Germantown, and Collierville
National numbers tell part of the story, but real estate is local. And the Memphis metro area has its own dynamics that make the affordability picture look different from what you’ll read in national headlines.
Memphis consistently ranks as one of the most affordable major metro areas in the country. The median home price for a three-bedroom, two-bathroom home sits around $328,000, and median rent for a two-bedroom apartment runs about $1,189 per month. The average monthly take-home salary in the area is roughly $4,360. Those numbers give Memphis buyers significantly more purchasing power than their counterparts in Nashville, Atlanta, or Charlotte.
But affordability varies within the metro. Buying in Germantown or Collierville is a different financial picture than buying in other parts of Memphis.
Germantown
Germantown’s established neighborhoods and strong school district keep demand consistent. Homes here sell at a premium compared to the metro median, but the combination of Tennessee’s lack of a state income tax and relatively affordable prices compared to similar suburbs in other Southern cities makes it competitive on a total cost-of-living basis. With inventory opening up across the market, buyers looking at Germantown have more options than they did even a year ago. If you’ve been searching for homes in Germantown, the improved inventory gives you more room to be selective about neighborhoods, lot size, and price.
Collierville
Collierville draws buyers with its town square character, top-rated schools, and a mix of new construction and established neighborhoods. Price points tend to run slightly higher than Germantown in newer developments, but the value proposition is strong when you factor in school quality and community amenities. The national trend of moderating price growth applies here too, and buyers exploring Collierville listings will find that the pace has settled into something more measured than the last few years.
Not sure which suburb fits your situation? A side-by-side look at Collierville, Germantown, and Bartlett can help you narrow things down.
Memphis proper
For buyers focused on value, Memphis itself remains one of the best deals in the Southeast. Neighborhoods in East Memphis offer established homes with strong resale history, while other areas of the city present entry points well below the metro median. The affordability advantage means first-time buyers can often get into homeownership here when they’d still be renting in peer cities.
Sellers still have reasons to act
If you’re a homeowner considering selling, the shifting market might give you pause. It shouldn’t. A few factors still work in sellers’ favor this year.
The lock-in effect is keeping inventory limited. Millions of homeowners nationwide are sitting on mortgage rates below 4%, which makes them reluctant to sell and buy at today’s rates. That limits the total number of listings hitting the market, even with inventory growing. Your competition is thinner than it looks on paper.
Moderate price growth means you’re selling near peak values. Waiting for prices to climb further is a gamble, and selling now while demand remains solid and your equity is strong makes sense, especially if you’re ready to make your next move.
Wondering what your home might be worth right now? A home valuation is a good starting point before you commit to anything.
What to watch for the rest of the year
A few things could shift the picture between now and December. Federal Reserve decisions on interest rates will influence where mortgage rates land by fall. If the economy weakens, rates could drop further and boost affordability. If inflation picks back up, rates could hold steady or tick higher.
Locally, new construction activity and employer growth in the Memphis metro will affect how much inventory hits the market and how fast it gets absorbed. These factors aren’t things you can control, but they’re worth tracking if you’re planning a move in the next several months.
Making your move in 2026
Housing affordability in 2026 is better than it’s been in several years. Rates are lower, inventory is higher, price growth has cooled, and incomes are catching up. For buyers, the window is wider. For sellers, the fundamentals are still solid even as the market rebalances.
The biggest miscalculation right now is holding out for perfect conditions. A 4% mortgage rate isn’t coming back. Neither are 2019 home prices. But the combination of improving rates, growing inventory, and wage gains means the math works better today than it did a year ago. And in the Memphis area, the affordability advantage makes that math work even better.
Whether you’re buying your first home in Memphis, upgrading to more space in Germantown, or selling in Collierville to start your next chapter, the 2026 market gives you room to move. Browse current listings or get in touch to talk strategy for your specific situation.
