U.S. Real Estate Market Outlook 2026

As we move into 2026, the national housing market is settling into a more measured and sustainable pace. After several years of pandemic-driven surges, rapid interest rate increases, and tight inventory, conditions are settling into a more predictable pattern. The extremes are behind us. What remains is a market defined by moderation and stability.

According to the 2026 National Housing Outlook, mortgage rates are expected to remain in the 6% to 6.5% range throughout much of 2026. While buyers should not expect a return to the ultra-low rates seen in 2020 and 2021, the volatility of the past few years appears to have eased. Stability, even at higher levels, tends to bring confidence back into the market.

Home price growth is projected to continue, but at a much slower pace than the double-digit appreciation experienced during the pandemic boom. Most forecasts call for low single-digit gains, generally between 0% and 4%. Inventory is improving gradually, helped in part by new construction, particularly in Southern markets. Sales volume is expected to rise modestly as both buyers and sellers adjust to today’s interest rate environment.

Importantly, this is not a distressed market. Nearly 40% of homeowners nationwide own their homes free and clear, and a significant portion have built substantial equity. Delinquencies remain historically low. Nationally, the story is one of stabilization and a return to long-term norms.

While national trends provide context, Smith Mountain Lake continues to operate within its own supply-and-demand dynamic. The year-end 2025 report from Team Fansler shows that waterfront property remains the primary driver of the local market. We appreciate the consistent work of Tom and Eric Fansler of Team Fansler, who have compiled detailed quarterly and year-end market reports for many years, providing valuable historical insight into Smith Mountain Lake real estate trends.

In 2025, 230 waterfront single-family homes sold at an average price of $1,250,189, achieving 97% of list price. That average price represents continued strength over 2024 levels, reinforcing that premium lakefront inventory remains in demand. At year-end, only 46 waterfront single-family homes were actively listed, with an average list price of $1,318,987 and an average time on market of 137 days. That level of inventory does not suggest oversupply.

Waterfront condos and townhomes also demonstrated resilience, with 106 sales in 2025 at an average price of $542,792 and a strong 98% sold-to-list ratio. Just 34 units were active at year-end. This segment continues to attract buyers seeking lake access at a lower entry point than detached waterfront homes.

Waterfront lots saw 57 sales in 2025 at an average price of $405,718, reflecting substantial appreciation compared to pre-2020 levels. Although 69 lots were active at year-end, average days on market were significantly longer than improved properties, suggesting buyers are more deliberate when planning new construction.

Water-access homes — properties without direct waterfront but with community lake privileges — recorded 95 sales in 2025 at an average price of $498,630, selling at 98% of list price. With only 27 active listings, this category also remains relatively constrained.

Nationally, the housing market is moving toward equilibrium. Rates have stabilized, appreciation has moderated, and inventory is improving gradually. Locally, Smith Mountain Lake continues to show pricing strength, particularly in waterfront segments where supply remains limited.

For buyers, the environment offers more predictability than the competitive peaks of 2021 and 2022, but it does not present widespread discounting. For sellers, well-positioned and appropriately priced properties are still achieving strong sale-to-list ratios. Strategy and presentation matter more than urgency.

The market is operating on fundamentals again. At Smith Mountain Lake, those fundamentals remain solid.