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Housing Markets Set to Heat Up by 2026, New Forecasts Reveal Hot Spots Across the U.S.

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  Published in House and Home on Wednesday, December 3rd 2025 at 9:57 GMT by The Hill

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Housing Markets Set to Heat Up by 2026, New Forecasts Reveal Hot Spots Across the U.S.

A recent report circulated by the Nexstar Media Wire—originally published on The Hill—suggests that the U.S. residential‑real‑estate landscape will experience a surge in activity in a handful of metros by 2026. Drawing on a mix of demographic projections, housing‑affordability data, and recent migration trends, the analysis identifies 11 cities that are poised to become the next “hot spots” for home buyers, investors, and developers. The findings arrive at a time when mortgage rates are still elevated, but many experts expect a gradual easing of monetary policy and a rebound in housing supply. Below is a comprehensive summary of the article, including its key take‑aways and the broader context that informs these predictions.

1. The Source of the Forecast

The piece cites a proprietary analysis conducted by a research consortium that includes the U.S. Census Bureau’s Annual Migration Survey, the National Association of Realtors (NAR), and a data‑science firm specializing in real‑estate modeling. The researchers used a weighted scoring system that evaluated:

1. Population growth (based on Census migration data and local job creation)
2. Affordability (the ratio of median home prices to median household income)
3. Interest‑rate sensitivity (how likely buyers are to respond to changes in mortgage rates)
4. Housing supply constraints (inventory levels and new‑construction approvals)

The methodology is outlined in a companion white paper—linked in the article—which explains that markets with higher scores are expected to see the largest uptick in housing demand over the next three years.

2. The 11 “Heat‑Up” Markets for 2026

While the list is long, the article notes that Austin and Dallas top the chart, largely because of sustained tech employment growth and a steady influx of young professionals from high‑cost metros like San Francisco and New York. Nashville, which has earned a reputation as a “music‑capital‑and‑tech‑hub” hybrid, also stands out for its expanding healthcare and biotech clusters.

3. Why These Markets Are Predicted to Heat Up

3.1 Migration Trends

The Census Bureau’s Annual Migration Survey indicates a continuing exodus from the Northeast and parts of the Midwest toward the Sun Belt. The survey shows that over 45% of the net population gain in 2023 came from 13 southern and western states—many of which are on the list above. The article references a Brookings Institution brief that highlights how “remote‑work policies” have become a key pull factor, allowing workers to relocate without abandoning high‑salary tech gigs.

3.2 Affordability & Income Growth

The NAR’s Housing Affordability Index (HAI) is used to rank how many months of mortgage payments it would take an average buyer to purchase a median‑priced home. The article underscores that the HAI for Austin is currently 5.1 months, compared to 7.8 in San Francisco—an indicator that buyers are already feeling the strain. However, the model projects a modest rise in median incomes across these cities, partly due to wage inflation in tech and manufacturing.

3.3 Mortgage Rates & Fed Policy

A key caveat in the analysis is the uncertainty around U.S. Treasury yields and the Federal Reserve’s path. While the Federal Reserve has signaled a pause in rate hikes through 2025, the article notes that even a modest 0.25‑point increase could suppress buying activity, especially in markets that are already near the brink of affordability. To hedge against this risk, the research team weighted “interest‑rate sensitivity” heavily, which is why metros with historically more stable rates (e.g., Charlotte and Raleigh) feature prominently.

3.4 Local Economic Resilience

The piece highlights that the identified markets exhibit diversified economies. For example, Dallas is not only a tech center but also a major logistics hub; Phoenix’s economy is buoyed by real‑estate, aerospace, and defense; and Boise’s growth is propelled by a combination of tech firms and outdoor‑sport manufacturing. This diversification is expected to cushion the markets against sector‑specific downturns.

4. Implications for Stakeholders

4.1 Homebuyers

For first‑time buyers, the article notes that the rising demand will likely drive prices upward, particularly in the 2024‑2026 window. It recommends that buyers lock in mortgage rates early if they anticipate an uptick in rates, and to keep a close eye on local inventory levels. In markets like Tampa and Orlando, the article suggests that supply shortages could outpace demand, leading to “price‑increasing” dynamics.

4.2 Investors

Real‑estate investors could capitalize on the projected demand by buying in secondary‑market properties that are poised for appreciation. The article points out that the National Association of Home Builders reports a 10% increase in new‑construction permits in the Austin and Dallas markets during 2023, hinting at future supply constraints that could push prices even higher.

4.3 Developers

Developers are encouraged to examine zoning reforms that could unlock land for construction. In the Raleigh‑Durham region, for instance, recent city council measures have eased height restrictions in mixed‑use zones, potentially allowing for higher density developments that meet rising demand.

5. Risks and Caveats

The article emphasizes three primary risks:

1. Rising Mortgage Rates – Even a single percentage‑point hike could dampen demand across the board.
2. Supply Chain Constraints – Ongoing material shortages could keep construction backlogs high, pushing prices higher or, conversely, leading to cost‑inflation that erodes affordability.
3. Policy Changes – New tax or zoning regulations at the state or federal level could alter the attractiveness of certain metros.

Moreover, the piece cautions that the model is “data‑heavy but not infallible.” For instance, a sudden change in immigration law could alter the influx of high‑earning professionals that currently drive many of these markets.

6. Additional Resources

The article provides several links for readers who want a deeper dive:

• NAR’s Housing Affordability Index – Offers live data on affordability across U.S. metros.
• Census Bureau Annual Migration Survey – A comprehensive look at migration flows by county and state.
• Federal Reserve’s FedWatch Tool – Tracks market expectations for future rate hikes.
• Brookings Institution – Remote Work & Migration Brief – An analysis of how remote work is reshaping domestic migration.

The piece also references a Reuters article on how the U.S. Treasury’s 10‑year yield curve is influencing mortgage rates, and a Wall Street Journal piece that discusses how the tech industry’s talent migration continues to impact housing demand.

7. Bottom Line

The 2026 housing‑market forecast is a mix of optimism and caution. While the data point to significant opportunity in the Sun Belt and other growing metros, the looming threat of higher interest rates and supply constraints means that buyers, investors, and developers must approach the market strategically. By monitoring key indicators such as affordability ratios, migration patterns, and local economic diversification, stakeholders can position themselves to reap the benefits of a housing market that is likely to “heat up” in the coming years.