If you’re a federal employee approaching retirement, your FERS annuity and TSP provide steady income, but your housing decisions can still affect your finances. Understanding how the housing market is behaving in 2026 can help you make more informed choices, whether you plan to stay in your current home, downsize, or relocate.
National Housing Trends
Experts describe 2026 as a year of stabilization for U.S. housing. Redfin projects national home prices to rise just 1%, while Zillow and the National Association of Realtors (NAR) forecast modest growth of 1–3%. Mortgage rates are hovering around 6%, and inventory is increasing in many areas, which affects buying and selling dynamics.
Downsizing Considerations
Downsizing, moving to a smaller or more affordable home, offers several advantages for retirees. It reduces ongoing expenses like property taxes, utilities, insurance, and maintenance, potentially saving $5,000–$10,000 annually. That extra cash can be redirected toward travel, healthcare, or boosting your TSP. Many federal employees tap substantial equity from long-held homes, often tax-free (up to $250,000 for singles, $500,000 for married couples under capital gains rules), providing a financial cushion without dipping into retirement savings. Downsizing also simplifies life, reducing upkeep and freeing more time for hobbies and family.
However, there are trade-offs. Emotional ties to a longtime home can make moving difficult. Upfront costs, including moving expenses ($4,000–$8,000 on average), realtor fees, and potential condo HOA dues, can add up. If your current home is already paid off and low-maintenance, the financial benefits may be limited. Smaller spaces may also restrict hosting family and friends.
Relocation Considerations
Relocating amplifies these factors. Target areas with strong housing demand and quick sales to maximize proceeds from your current home. In contrast, some regions are seeing slower sales and longer times on market, giving buyers more negotiating leverage.
Regional Market Snapshot
In 2026, housing conditions vary widely across the U.S.:
Hotter, competitive markets (limited inventory, quick sales, price growth):
- Hartford, CT
- Buffalo, NY
- New York, NY Metro
- Providence, RI
- San Jose, CA
Markets with higher inventory and slower sales (more balanced for buyers):
- Indianapolis, IN
- Atlanta, GA
- Charlotte, NC
- Jacksonville, FL
- Oklahoma City, OK
These differences highlight how regional market conditions can affect housing decisions. While some areas remain highly competitive, others are moving toward a more balanced or buyer-friendly environment, offering more choice and negotiating power.
