via themortgagepoint.com—In this excerpt from our full November cover story, Rick Sharga, Founder and CEO of CJ Patrick Company, offers a sweeping analysis of where the housing market stands as 2026 approaches. From his view of a five-year “reset” to the latest signals on delinquencies, investor activity, demographic pressure, and policy risks, Sharga breaks down the economic forces and industry blind spots that will shape the year ahead.

How would you characterize the housing market heading into 2026: correction, stabilization, or early recovery?

I believe that we’re in the third year of a five-year “reset” period, as the market slowly adjusts to higher prices and higher mortgage rates. We’ve never had a period where home prices rose by over 40%, followed by mortgage interest rates doubling, and that one-two punch decimated affordability, especially for first-time buyers. Existing home sales fell from over six million in 2021 to five million in 2022, four million in 2023 and 2024, and are on pace to finish the year at about the same number this year. Inventory levels are rising, days on market increasing, and home price appreciation slowing down—and reversing course, in some markets—as wages grow. We can probably expect another year of lackluster sales and price growth in 2026, but the market should begin to recover as we move closer to 2027.

With affordability still strained and inventory tight, do you see transaction volumes improving next year or remaining near historic lows?

I think 2026 sales volume will be modestly better than 2025, but not much more than that. Barring anything extraordinary happening in the economy, either positive or negative—we’ll likely have at least one more year where existing home sales will be challenged to go much higher than four million units, and where home price appreciation will continue to slow down in most markets and go negative in some parts of the country. Inventory will continue to increase, though, at least partly due to the pace of sales slowing down, and some older homeowners deciding it’s time to downsize.

What do the latest foreclosure and delinquency trends suggest about borrower health going into 2026?

Mortgage delinquency rates continue to stay below historical averages and are close to the lowest they’ve ever been. There’s a combination of factors at play here: the unemployment rate is still very low (and there’s a strong correlation between unemployment rates and mortgage delinquency rates); borrower credit quality has been excellent; millions of homeowners refinanced into lower interest rate loans, and so may be paying less every month today than when they first bought their house; and there’s a massive amount of homeowner equity—well over $34 trillion—that distressed …READ MORE