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Rather, interest rates are predicted to stay in the low 6% range, improving affordability “just enough to lure some on-the-fence buyers,� according to Redfin’s 2026 Predictions, which the real estate analysis group has dubbed “The Great Housing Reset.�

“(2026) will mark the beginning of a long, slow recovery for the housing market,� . “It won’t be a quick price correction ... instead the Great Housing Reset will be a years-long period of gradual increases in home sales and normalization of prices.�

The group says incomes will rise faster than home prices for the first time since the Great Recession.

“It won’t be enough to make homebuying affordable in the short run for Gen Zers and young families, who will be forced to make tradeoffs, from moving in with roommates or their parents to delaying having children,� Redfin says.

Politicians from both parties are already looking at ways to facilitate housing affordability.

“Some of those proposals will chip away at affordability, but they won’t be an instant fix,� Redfin says.

In Arizona, a law went into effect Jan. 1 that requires cities with a population of at least 75,000 people to more easily allow for duplexes, triplexes, fourplexes and townhomes on all lots zoned for single-family use within a designated area.

The Tucson City Council voted in December to allow those developments citywide.

In the Tucson market, the year closed out with new home prices averaging in the $475,000 price range and the average existing home in the $443,000 range.

Existing homeowners who secured mortgage rates in the 3% range prior to the pandemic are hesitant to move, creating more demand for new housing.

The Tucson market may be faring a little better due to job announcements and strong sales reported by homebuilders.

“So far, the Tucson-area homebuilders continue to see what can clearly be considered as reasonably good new home closing numbers despite the near panic and confusion in the national marketplace,� said local housing analyst Jim Daniel, with . “We anticipate a substantial level of future upside opportunity in the Tucson market because of the sustained growth in economic activity, jobs and population growth that we are currently seeing and can reasonably expect to continue to see for at least the next two to three years.�

He noted it won’t be “wild or crazy, just a continuation of solid housing market performance.�

Demand for rents, renovations expected to rise

Several new apartment complexes and rental communities that came online in 2025 helped to stabilize rental prices after a rapid increase from 2020 to 2024 in Pima County.

The average rent of $1,213 is 3.5% down from 2024, with some luxury units here commanding more than $4,000 a month.

But apartment construction has slowed from the 2021-2022 peak, so fewer apartments under construction, coupled with growing demand, is expected to result in rental increases starting this year.

Meanwhile, home renovations to accommodate extended family or roommates were on the rise in 2025 and are expected to continue in popularity.

Redfin predictions are that many homeowners who bought when interest rates were close to 7% will refinance to remodel.

“Strong home-value appreciation over the last several years means many homeowners have sizable equity; the typical mortgaged homeowner had $181,000 inn untapped equity as of mid-2025,� the report says. “For many people, renovating their current home is more appealing and less costly than moving.�