Global Housing 2026: Rates Ease as Sales Rebound

A Turning Point for American Buyers

The US housing market entered spring 2026 with cautious optimism — and a milestone. On February 26, the average 30-year fixed-rate mortgage fell to 5.98%, dipping below 6% for the first time since September 2022, according to NPR. The psychological significance is hard to overstate: after peaking near 7.8% in late 2023, borrowing costs are finally retreating toward territory many buyers consider manageable.

The National Association of Realtors (NAR) had forecast this recovery. Chief Economist Lawrence Yun predicted a 14% jump in existing home sales for 2026 — the largest anticipated annual increase in years — driven by modest rate declines, continued job growth, and pent-up demand from buyers who have deferred purchases for three or more years.

Monthly Payments Finally Falling

For buyers, the numbers are starting to move in the right direction. Median monthly housing payments fell to $2,365 during the four weeks ending January 4, 2026 — down 4.7% year-on-year and the lowest level recorded in two years, according to National Mortgage Professional. Housing economists describe 2026 as potentially the first year since 2020 in which average monthly mortgage costs actually decrease.

J.P. Morgan Global Research projects US home prices will be broadly flat in 2026, after nearly doubling over the previous decade. That combination — stable prices, lower rates — is meaningful. NAR estimates that rates at or near 6% could unlock as many as 5.5 million additional qualified buyers nationally.

The recovery, however, is uneven. Middle-income households can afford just 21% of available listings — down from roughly 50% before the pandemic. High-cost coastal markets remain largely out of reach for first-time buyers, and the median home price still sits at $405,000. Inventory is slowly improving, but has not returned to pre-2020 levels.

Europe: Fast Prices, Slow Wages

Across the Atlantic, the housing affordability problem has a different texture — one that is increasingly political. Italy leads Europe's residential price growth, with home values rising approximately 3.9% year-on-year in mid-2025, and prime rents in Milan and Rome recording some of the continent's highest gains. Available listings in Italian cities fell 4% in 2024 and continued to shrink into 2025.

More broadly, EU house prices have grown far faster than household incomes over the past decade. Price-to-income ratios deteriorated by more than 20% in Portugal, the Netherlands, Hungary, Luxembourg, Ireland, Czechia, and Austria. EU households spent an average of 19% of their disposable income on housing in 2024 — reaching 36% in Greece, and 25% in both Germany and Sweden.

In several markets — Spain, Portugal, Ireland, Poland, and Bulgaria — renting a standard two-bedroom flat consumes more than 80% of the median salary in urban areas, according to Eurostat data cited by the European Commission. Housing has risen to become the top concern among EU citizens, according to recent polling.

Cautious Optimism for the Year Ahead

Real wages in the EU are projected to grow by 1.6% in 2025 and 1.1% in 2026, which should modestly improve borrowing capacity, according to European Commission forecasts. JLL projects global living investment will surpass $250 billion in 2026, with the US expected to return to pre-pandemic investment levels. The global housing market is stabilizing after years of post-pandemic turbulence — but the gap between what homes cost and what ordinary households can afford remains the defining challenge of the decade.