The U.S. housing market showed signs of normalization in early 2026 with mortgage rates briefly dropping below 6%, and housing starts rising 7.2% month-over-month. However, geopolitical tensions and tariffs caused mortgage rates to rise again to 6.38%, impacting affordability and demand. Despite short-term challenges, strong housing supply shortages and healthier homebuilder finances suggest long-term growth potential. Earnings estimates for major homebuilders show declines in 2026 but significant growth expected in 2027.