Shadow Inventory, Demand May Spur 2026 Housing Recovery: Compass

A home is seen for sale in Austin, Texas, on April 24, 2025. Brandon Bell/Getty ImagesShadow inventory could lead to a flood of residential housing in 2026, while shadow demand, coupled with modest price growth and stronger wages, could absorb much of that supply and help the market turn the corner after a prolonged slowdown, according to a new study on the national housing outlook.Shadow inventory refers to homes that were listed for sale but later withdrawn, as sellers reconsidered their options or became frustrated with current market conditions. Shadow demand refers to potential buyers who have been sidelined, waiting for mortgage rates to improve.