The Future of Housing
Amid inflation, high interest rates, and tariff uncertainty, homebuyers and renovators are eager to see how the 2026 housing market might turn in their favor. The age-old saying persists—the best time to buy or renovate your home is when you need to buy or renovate your home. That said, experts are forecasting trends that might be advantageous for Midwest residents to keep in mind as they navigate the market in the new year.
To Build or to Buy
A Five-Year Housing Market Predictions report from U.S. News & World Report, published July 2025, points to the same, critical factor driving housing market activity: interest rates. As many homeowners have been locked in to low mortgage rates, home sales are expected to remain muted as long as mortgage rates remain high, and the Federal Reserve forecasts inflation won’t fall near 2% until 2027 or later. With this, listing activity could remain stagnant in the near term, though it might be moving in the right direction.
Newly built homes are helping meet pent-up demand, as they make up nearly 30% of overall single-family housing inventory. This gives way for a more cost-effective option for new buyers—according to the insights from U.S. News & World Report. Those interested in a new build should “look for larger builders interested in selling off their inventory to offer generous incentives, including mortgage rate buy-downs, closing cost contributions, and upgrade allowances.”
Upgrade Where You Are
Despite bright spots in housing market activity and mortgage rates slowly declining, with limited inventory, interested buyers might consider renovating their existing space as an alternative option.
As designer Emily Thull of McDonald Remodeling explains, “I have had many clients go through the process of ‘do we move or remodel?’ And once they see what their money will get them, they realize there is a lot of value in staying put and investing that money into improving how they live in their own home.”
Thull also notes that tariffs do not affect remodels as much as new construction, as renovators do not rely on as many raw materials.
The Takeaway
Housing market trends point to long-term progress, even if the progress feels slow. As
any home decision is deeply personal, residents should thoughtfully consider which choice best aligns with their long-term needs.
Trends to Watch
For those looking to build or remodel in 2026, there are a few trends expected to make a strong presence:
Salvage quality and build for the future: Renovators should look for more timeless trends; as Austin and Kotono Watanabe of local architecture firm keep explain, “If architecture is not actively salvaging the carbon and craftsmanship of 100-year-old houses, new construction ought to be designed to last the next 100 years.”
Open kitchens and living spaces, eliminate hallways: Older homes often used walls to separate domestic work and life from entertaining spaces. By removing these barriers, renovators have access to abundant, useful square footage.
Maximize parking with open carports: As Andrea Swan, owner of Swan Architecture, explains, many municipalities limit sizes of garages. An outdoor carport would be a
secondary solution for a covered parking spot.
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