The 2026 Mid-Year Housing Update: Why Forecasts Shifted
Explore the mid-year 2026 housing market update. Learn why economists revised their forecasts for mortgage rates, existing home sales, and new construction, and why home prices are still expected to rise despite slower demand.
If the 2026 housing market feels confusing, you are not alone.
At the end of 2025, economists were forecasting a much stronger year. The expectation was that mortgage rates would drop, affordability would improve, and home sales would rebound significantly. However, as we pass the mid-year mark, the reality has been quite different.
According to a recent update from Keeping Current Matters , lingering inflation, economic uncertainty, and geopolitical tensions have kept mortgage rates elevated for longer than anticipated. In response, experts have revised their forecasts for the remainder of 2026. Here is what those changes mean for buyers and sellers.
Mortgage Rates May Remain Elevated
While many hoped rates would return to the upper 5% or low 6% range by summer, experts now project rates will likely stay in the mid-6% range through the end of the year .
The good news is that this is still lower than the peaks seen a year ago. However, the takeaway for buyers is clear: waiting for a dramatic drop in rates may not pay off. If inflation drops or geopolitical tensions resolve, rates could ease, but planning around the current mid-6% environment is the safest strategy.
Existing and New Home Sales Revised Lower
Because affordability remains challenging, the pace of home sales has slowed. Initially, experts projected 4.5 million existing home sales in 2026; that forecast has now been revised down to 4.2 million .
New home sales have seen a similar adjustment. Builders originally expected to sell over 700,000 new homes this year, but forecasts have been trimmed to just shy of that number . For buyers, this slowdown in new construction sales presents an opportunity. Builders are highly motivated to move inventory, which means incentives like rate buydowns, closing cost assistance, and pricing flexibility are widely available.
Home Prices Are Still Expected to Rise
Despite slower sales and elevated rates, there is one forecast that has not been revised downward: home prices.
Experts still expect national home prices to rise in 2026 . The reason is simple supply and demand. While buyer demand has softened, the number of homes available for sale remains relatively limited overall. This ongoing imbalance continues to support property values, providing comfort to sellers and reassurance to buyers that their investment is unlikely to depreciate immediately.
