The 2026 Residential Rebound: A Forecast for National Sales and Southern California Luxury

CAMPBELL WELLMAN PROPERTIES 2026 market forecast

After nearly two years of a real estate market held in an affordability headlock, the data is aligning to point toward a clear and compelling turning point. At Campbell Wellman, we are looking past the current volatility to the imminent future, and the forecast for 2026 is an encouraging return to a healthy, more active sales environment.

Based on projections from major institutional sources and echoed by influential industry figures, we anticipate the long-awaited residential rebound is set to materialize, with home sales nationally projected to jump by nearly 10% in 2026. For our discerning clients in the ultra-competitive Westside LA and South Bay luxury markets, this shift will unlock significant opportunities for both buyers and sellers who are poised for action.

 

 

The National Picture: A Decade-High Surge in Sales Volume

The consensus among major economic research groups is that 2026 will be the year of the “Great Un-Pause.”

The Data Points to a 10% Sales Increase

According to the latest forecasts from Fannie Mae’s Economic and Strategic Research (ESR) Group, total home sales—combining new and existing properties—are projected to be 9.2% higher at the end of 2026 compared to 2025. This momentum is largely driven by a single, seismic shift: the moderation of mortgage rates.

  • The Mortgage Rate Catalyst: Fannie Mae's September 2025 outlook anticipates the average 30-year fixed mortgage rate will fall to an estimated 5.9% by the close of 2026. This sub-6% rate is the crucial threshold that is expected to finally unlock the pent-up demand from buyers who have been waiting on the sidelines.

  • The Industry View: This institutional data is strongly supported by influential voices in the field. This is not a short-term blip, but the beginning of a sustained period of increased transaction volume as buyers acclimate to the new reality and stop waiting for the ultra-low, pre-2022 rates to return.

In short, the financial conditions required for a broader market resurgence are beginning to click into place. As affordability chains improve—driven by potential rate relief, continued income growth, and a gradual rise in inventory—the flow of transactions that has been suppressed by the "lock-in effect" is expected to normalize.

 

 

The Local Nuance: Westside LA and South Bay Luxury

While the national forecast is strong, the impact in the unique, non-contingent world of Southern California luxury is always more nuanced. The Westside LA and South Bay markets—from Malibu and Brentwood to Manhattan Beach and Palos Verdes—operate on a different playbook.

For the Luxury Buyer: Opportunity Knocks

In the Westside LA and South Bay markets, cash remains king, insulating a significant portion of the luxury segment from rate fluctuations. However, the anticipated national drop in interest rates will have a powerful indirect effect:

  1. Increased Move-Up Activity: As rates ease, more homeowners in the $2M–$5M range will be able to sell their primary residences and move up to the $7M+ luxury segment. This added fluidity in the feeder market creates a wider, more motivated pool of potential buyers for trophy properties.

  2. Higher Purchasing Power: For luxury buyers who utilize jumbo financing, the decline toward a 5.9% rate represents a clear increase in purchasing power, making a $20M property significantly more accessible and financially justifiable.

  3. The Return of Global Capital: Stable US market conditions, coupled with moderate rate expectations, continue to attract international buyers who view prime Los Angeles real estate as a critical, long-term wealth asset.

For the Luxury Seller: The Time to List is Approaching

For our South Bay and Westside clients who have been hesitant to list, 2026 provides a powerful dual incentive:

  • Moderated but Reliable Appreciation: While the rest of California is forecasted to see a modest 2%–3.6% price appreciation in 2026 (CAR), the luxury coastal markets consistently outperform the state average due to unparalleled demand and scarcity. We do not anticipate a price "crash"; rather, we expect a return to a more stable, sustainable appreciation trend, which is a significant psychological relief for sellers.

  • Higher-Quality Buyer Pool: The 10% jump in national sales activity means the overall quality of buyers—in terms of financial readiness and motivation—is improving. For the seller, this translates to cleaner offers, fewer contingencies, and a more predictable closing process.

In the Westside and South Bay, the most expertly prepared and marketed properties will be the first to capture this renewed energy. Our focus remains on delivering the strategic counsel and unparalleled reach required to capitalize on this shifting market dynamic.

 

 

Our Perspective: Position for the Momentum

The data is clear: 2026 will not be a return to the frenzy of 2021, but a definitive shift from the stagnation of the preceding years. It will be a market defined by renewed activity, better financing conditions, and a return to more rational, sustainable growth.

At Campbell Wellman, we are not simply observers of the market—we are strategists. The time to prepare is now. Whether you are a buyer waiting for the perfect moment to step into your dream Malibu compound, or a seller ready to command the premium your unique South Bay estate deserves, the coming residential rebound offers the most significant opportunity for movement the market has seen in years.

The Great Un-Pause is coming. Are you ready to make your move?