The outlook for Maine’s housing market in 2026 is optimistic, but affordability is still the main challenge. This is true for people looking to rent or buy a home, according to a new report from the Maine State Housing Authority. The 2026 Housing Outlook Report shows that while housing production is up and some market indicators are stabilizing, the gap between incomes and housing costs is getting wider.
The 22-page report looks at trends in housing supply, prices, rental affordability, mortgage activity, and homelessness across Maine. It points out that rising prices for both homes and rentals are putting more pressure on households at almost every income level. is the scale of home price appreciation over the past decade.
Between 2015 and 2025, Maine’s median household income rose by 44 percent. Over the same period, however, the median home price surged by 187 percent, dramatically altering the affordability equation for prospective buyers.
That imbalance has reshaped access to homeownership. Ten years ago, the state’s median income exceeded the amount needed to afford a median-priced home by roughly 21 percent. Today, median income covers only about 61 percent of what would be required to purchase the typical home, a reversal that highlights how quickly housing costs have outpaced earnings.
Maine’s housing prices tended to rise more slowly than the national average. In recent years, that trend flipped. Home prices in the state climbed by nearly 37 percent over a relatively short period, compared with just over 19 percent nationwide. During that same window, wages and salaries in Maine grew by about 27 percent, strong by historical standards, but insufficient to keep pace with the housing market.
Demand Continues to Exceed Supply
The report notes that demand for homes remains stronger than available supply, a dynamic that continues to support elevated prices despite higher borrowing costs. One contributing factor is the homeowner’s hesitation to sell. With mortgage rates remaining well above pre-pandemic lows, many owners are reluctant to give up existing low-rate loans, limiting the number of homes coming to market.
Sales volume illustrates this tension. While transaction activity is well below the peak reached in 2022, sales have been relatively steady for the past two years. According to MaineHousing, stable sales paired with rising prices typically indicate that buyer demand is outpacing inventory rather than weakening.
Loan origination data supports that interpretation. Mortgage issuance increased modestly in 2025 compared with 2024, even though key market conditions—such as pricing and interest rates, did not change dramatically. The report suggests that buyers and sellers who had been waiting for rate relief may be moving forward as expectations of sharply lower rates fade and financial pressures mount.
Mortgage Rates Offer Cautious Optimism
Interest rates remain a central factor in Maine’s housing outlook. Mortgage rates hovered around 7 percent for much of 2024 and 2025, but the report indicates they are beginning to drift downward into the 6 percent range. While still high by recent historical standards, even incremental declines could help ease monthly payment burdens for buyers.
MaineHousing’s First Home Loan Program briefly reduced its rate to 5.375 percent in late 2024 before adjusting back to 5.95 percent. The agency notes that the program is designed to follow broader market trends, meaning further declines in mortgage rates could translate into more favorable financing options for first-time buyers.
Lower borrowing costs are particularly critical in an environment where home prices remain elevated. High interest rates exacerbate affordability challenges by increasing monthly payments, often pushing ownership out of reach for households that might otherwise qualify based solely on their income.
Rental Market Pressures Intensify
Affordability challenges are even more pronounced in the rental market. The report finds that the majority of renter households earning less than $50,000 per year are now considered “cost burdened,” meaning they spend more than 30 percent of their income on housing.
Approximately 80 percent of renters making under $35,000 annually fall into this category, along with just over 60 percent of those earning between $35,000 and $50,000. These figures represent a sharp increase from prior years, particularly for middle-income renters. In 2021, fewer than half of households in the $35,000 to $50,000 range were cost-burdened.
Rising rents, combined with limited supply and competition from higher-income households, have left many renters with few affordable options. The report suggests that without significant additions to both subsidized and market-rate rental housing, cost burdens are likely to persist.
Housing Production Shows Momentum
One of the brighter spots in the outlook is housing production, particularly in the affordable segment. MaineHousing reports that its affordable housing output remains well above historical averages, with a robust pipeline extending into the coming years.
In 2025, the agency supported the construction of 755 affordable housing units. An additional 826 units are expected to be completed and available for occupancy by the end of the current year. While these numbers fall short of meeting overall demand, they represent meaningful progress in a state that has long struggled with a limited housing supply.
The report emphasizes that continued production, both subsidized and market-rate, is essential to addressing affordability challenges. Although Maine’s affordable housing income tax credit has been made permanent, MaineHousing cautions that maintaining current production levels will likely require expanded funding sources or enhancements to existing programs.
Construction costs, which surged in recent years, appear to be stabilizing. However, due to the long timelines associated with housing development, the benefits of slowing cost increases may not be fully realized until later this year or in 2027.
The report also flags the potential impact of the federal Buy America Act, which requires certain construction materials to be sourced domestically. If housing programs financed through the U.S. Department of Housing and Urban Development are exempted, as has been proposed, the law may have little direct effect on affordable housing costs in Maine. Without exemptions, however, future projects could face renewed cost pressures.
Homelessness Trends and System Strain
MaineHousing’s outlook also examines homelessness trends statewide. Point-in-time counts show that homelessness levels in 2023 and 2024 were largely consistent, returning close to pre-pandemic figures. While this suggests some stabilization, the report highlights growing strain within the shelter system.
The average length of stay in emergency shelters has increased steadily over recent years. According to the agency, this reflects both a willingness among individuals to remain in shelters and the increasing difficulty of securing permanent housing solutions amid tight market conditions and limited affordable inventory.
Organizations serving people experiencing homelessness are also facing operational challenges, which the report attributes in part to years of underfunding. MaineHousing notes that without sustained investment, progress in reducing homelessness could stall.
Looking Ahead to 2026
The report concludes that market-rate housing production, broader economic health, mortgage interest rates, and foreclosure trends will be key indicators to watch in the year ahead. MaineHousing predicts that mortgage rates are unlikely to rise further and may gradually decline, a shift that could ease barriers to homeownership if paired with continued supply growth.
Maine’s housing outlook in 2026 suggests cautious optimism. Production is accelerating, homelessness is stabilizing, and borrowing costs may be edging lower. Yet affordability remains the central issue shaping the state’s housing landscape, one that will require coordinated policy, sustained investment, and long-term planning to resolve.
