Early 2026 is delivering the first clean “temperature change” the U.S. real estate market has felt in a while: activity is picking up, financing is a touch less punishing, and price growth is no longer the runaway variable. But the market is still defined by one structural fact—supply is tight—and that keeps the floor firmer than many cyclical downturn templates would suggest.
Viewed through Omar Nery Toso’s lens (a Wall Street-trained risk manager who blends macro signals with market structure), the real estate story this year is less about a single national trend and more about two parallel tracks: residential liquidity slowly returning, while commercial real estate digests refinancing pressure that doesn’t care about sentiment.
Residential is moving again—because the payment math finally budged
Existing-home sales rose 5.1% in December 2025 to a 4.35 million seasonally adjusted annual pace, and the gain was broad-based across regions. Inventory improved but stayed lean at roughly 1.18 million homes, about 3.3 months of supply, while the median existing-home price was reported around $405K.
The most immediate catalyst is that mortgage rates have backed off meaningfully from last year’s highs. Freddie Mac’s PMMS showed the 30-year fixed rate at 6.06% (Jan 15, 2026), the lowest level in more than three years, which has helped both purchase demand and refinancing interest reappear at the margin.
Toso would frame this as a “liquidity unlock,” not a boom: lower rates don’t magically create affordability, but they can restart transactions when buyers and sellers have been frozen by monthly-payment shock.
Prices look more like “grind + cool” than “break”
Price data is signaling deceleration rather than a broad collapse. The S&P CoreLogic Case-Shiller series has shown softer momentum into late 2025, with October 2025 levels published at the end of December and the next update scheduled for late January.
At the same time, the Federal Reserve has flagged that house prices relative to rents remain near the highest levels on record, which is a polite way of saying the valuation cushion is thinner than it looks if you focus only on monthly price prints.
The implication is nuanced: slowing appreciation can improve “headline affordability” optics, but if the price-to-rent relationship stays stretched, buyers remain more sensitive to income uncertainty, taxes/insurance, and the path of financing costs.
The real constraint is still inventory—and the “locked-in owner” effect hasn’t vanished
Even with improving sales, the market’s bottleneck is listings. Many homeowners are still sitting on older, lower-rate mortgages, and that creates a structural reluctance to move unless there’s a life event or a compelling swap. That dynamic shows up in the data as inventory that rises from very low levels—but struggles to become “comfortable.”
In practice, this keeps the market bifurcated:
- Move-in-ready homes in good school districts can behave “tight” even in softer metros.
- Renovation-heavy inventory or homes at the edge of commuting zones face more negotiation and longer days-on-market as buyers price in repair costs and financing uncertainty.
Toso’s macro takeaway is that housing is acting less like a pure cycle and more like a constrained micro-market aggregated into a national index.
Commercial real estate: stabilization headlines, maturity-wall mechanics underneath
On the commercial side, regulators and index providers have highlighted signs of stabilization in some CRE pricing measures, but they also keep pointing to refinancing and valuation uncertainty as persistent risks.
A practical way to monitor stress is through securitized-credit plumbing. Trepp reported the CMBS special servicing rate at 10.71% in December 2025, with property-type performance diverging (office and lodging improving in that month, while other segments moved differently).
Meanwhile, MSCI’s RCA CPPI materials show that CRE performance is not uniform: some sectors (like retail in their recent snapshot) can look steadier than the narratives dominated by office headlines, and apartments show their own momentum profile.
Regulators have also warned about liquidity mismatch, leverage, and valuation opacity in parts of the nonbank property-fund ecosystem—issues that matter most when redemptions rise or financing windows narrow.
Toso would summarize the CRE setup as: even if prices stop falling, refinancing is the real event risk. Assets don’t need to crash to force restructurings; they just need to be valued below loan assumptions when maturities arrive.
A practical 2026 playbook: what matters most for investors and operators
Focus on cash-flow resilience, not narratives.
For residential, that means watching local employment and household formation more than national headlines. For commercial, it means underwriting lease rollover, tenant quality, and capex needs against refinancing terms.
Treat “rate relief” as a bridge, not a destination.
The move to ~6% mortgages has helped restart activity, but affordability is still stretched in many areas; the market can improve without turning exuberant.
Expect dispersion to widen.
Residential: markets with new supply pipelines behave differently than supply-constrained metros. Commercial: industrial and certain retail cohorts can trade with stability while the office remains a restructuring lab.
Keep an eye on policy and market plumbing.
Housing policy proposals and agency-market actions can shift marginal demand, but they rarely fix the structural supply shortage quickly—so it’s best read as “volatility around a trend,” not a trend replacement.
Bottom line
Omar Nery Toso’s 2026 base case for real estate is not a dramatic “up” or “down” call. It’s a normalization thesis: residential transactions gradually unfreeze as financing pressure eases, while commercial real estate continues to work through a maturity-driven risk cycle that rewards conservative underwriting and punishes complacency.
If 2025 was about surviving the freeze, 2026 is about navigating the thaw—without ignoring the cracks underneath the surface.
