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The Mid-Year Housing Market Update: Why Forecasts Changed in 2026
If the housing market feels confusing right now, you’re not alone.
Mortgage rates have risen. Home sales haven’t picked up like expected. And many buyers and sellers are wondering when things will feel easier or be more affordable.
The truth is: a lot changed over the first half of this year.
Back at the end of 2025, economists were forecasting a much stronger housing market for 2026. They expected mortgage rates to come down, affordability to improve more dramatically, and home sales to rebound.
But lingering inflation, economic uncertainty, and growing geopolitical tensions overseas pushed mortgage rates higher than expected. And because rates stayed elevated for longer, many buyers continued to hold off.
That’s why experts recently revised their housing forecasts for the rest of the year (see graph below):
So, what does this actually mean for you? Let’s break it down.
Mortgage Rates May Remain Elevated
While just about everyone wants mortgage rates to go back to the upper 5s or low 6s we saw at the start of the year, as of right now, the experts don’t think that’s likely to happen this year.
Instead, forecasts have been revised upward from the low-6% range that was initially expected. Many industry experts now anticipate mortgage rates will remain in the mid-6% range throughout the year. The positive news is that rates are still lower than they were a year ago.
Of course, this outlook is based on current conditions. If overseas conflicts are resolved or inflation eases, the forecast could change.
Existing Home Sales Revised Lower
Back in late 2025, experts expected we’d sell an average of 4.5 million homes this year. Now? That’s dropped down a bit to 4.2 million.
That tells us something important: buyers are still hesitant because affordability remains challenging.
Higher mortgage rates have made monthly payments less affordable, particularly for first-time homebuyers. As a result, the housing market has slowed more than initially expected. However, despite the downward revision in the forecast, home sales are still projected to exceed last year's levels.
Once geopolitical tensions resolve and rates begin to settle down, many experts believe that group of buyers will be ready to jump back in. As Lawrence Yun, Chief Economist at NAR, explains:
“There is sizable pent-up demand that could be released into the market.”
There have already been a few glimmers of renewed hope lately. In recent months, pending home sales have been improving month-over-month despite higher rates.
So, if you’re able to afford a home at today’s rates, it could still make sense to buy now. Because otherwise, if you wait, you’ll have more competition (and potentially fewer homes to choose from) when those other buyers jump back in.
New Home Sales Also Slowed
Builders also expected to have a stronger year. Earlier forecasts projected new home sales would top 700k in 2026. Now, economists expect we’ll be just shy of that number.
Again, mortgage rates are a major reason why.
But the upside for buyers is that builders may be even more motivated to sell. That means builder incentives, negotiation opportunities, and pricing flexibility may continue in many markets. So, if you live somewhere where there’s more new construction, this may actually be a bright spot for you.
Builders may be more willing to negotiate, giving buyers greater leverage to secure a better deal.
Home Prices Are Still Expected To Rise
This remains one of the key insights from the overall forecast: despite slower sales activity, experts have not lowered their home price projections.
They still expect prices to rise nationally this year.
Why? Because while buyer demand has softened, the number of homes for sale is still relatively limited overall. That imbalance is helping support prices, even in a slower market.
Of course, conditions vary depending on where you live. Some markets are cooling more than others. But nationally, experts are still projecting steady price growth — not a major decline. And that should be a comfort whether you’re buying or selling.
Because sellers don’t want a major price drop and buyers may think they do, generally, you feel better about a big purchase when it doesn’t depreciate right away.
Bottom Line
The housing market hasn’t rebounded as quickly as experts originally hoped. But that doesn’t mean it’s stalled.
Higher inflation and lingering economic uncertainty caused economists to revise their forecasts for this year. Importantly, when those two things settle down, many experts believe the market will regain its momentum.
So don’t see this revision in forecasts as a sign of trouble. See it as a temporary reaction to overall conditions and uncertainty.
If you want to know what’s happening in your local market and what it could mean for your plans for the rest of this year, talk to a local agent.
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Explore available properties in Miami Shores. For questions about real estate, reach out to Ralph Magin, your reliable real estate agent, at 305-741-2142 or visit http://ralphmagin.com/.
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