If the housing market feels confusing right now, you’re not alone.
Mortgage rates have gone up, and home sales haven't bounced back as much as people expected. A lot of buyers and sellers are left wondering when the market will feel easier and more affordable.
The truth is, a lot has changed over the first half of this year
At the end of 2025, economists were predicting a stronger housing market in 2026. They thought mortgage rates would fall, affordability would improve significantly, and home sales would pick up.
But persistent inflation, economic uncertainty, and rising geopolitical tensions abroad drove mortgage rates up more than people expected. With rates staying high for longer, many buyers chose to wait.
That’s why experts have just updated their housing forecasts for the rest of the year (see graph below):
So what does this mean for you? Let’s walk through it.
Mortgage Rates May Remain Elevated
Most people hope mortgage rates will return to the upper 5s or low 6s we saw earlier this year, but experts don’t expect that to happen before the end of the year.
Forecasts have been revised down from the low 6s they first predicted. Most industry groups now expect rates to stay around the mid 6s this year. The good news is that’s still lower than a year ago.
Of course, this is based on what we know right now. If the conflict overseas eases or inflation continues to cool, things could change. But if you're holding off in hopes of much lower rates, the outcome may not be what you're expecting.
Existing Home Sales Revised Lower
At the end of 2025, experts predicted we’d sell about 4.5 million homes this year. Now, that forecast has been adjusted slightly lower to around 4.2 million homes.
That tells us something important: many buyers are still on the sidelines because affordability continues to be a challenge.
Higher mortgage rates have made monthly payments more challenging, especially for first-time buyers. As a result, the market has moved a little slower than experts originally expected. The good news is that even with the revised forecast, we're still on track to sell more homes than we did last year.
Once geopolitical tensions ease and rates start to stabilize, many experts think that group of buyers will be ready to get back into the market. As Lawrence Yun, Chief Economist at NAR, explains:
““There is sizable pent-up demand that could be released into the market.”
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There have already been a few signs of renewed hope lately. In recent months, pending home sales have been improving month over month, even with higher rates.
So if you can comfortably afford a home at today’s rates, it might still make sense to move forward now. Otherwise, if you wait, you could end up facing more competition and possibly fewer homes to choose from once those other buyers reenter the market.
New Home Sales Also Slowed
Builders were also expecting a stronger year. Earlier forecasts projected new home sales would exceed 700,000 in 2026. Now, economists expect we’ll come in just under that number.
Once again, mortgage rates are a big reason for that.
But the upside for buyers is that builders may be even more motivated to sell. That can mean more incentives, better room to negotiate, and more flexibility on pricing in many markets. So if you’re in an area with a lot of new construction, this could actually be a real bright spot for you.
Builders may be more open to negotiating right now, which gives you extra leverage to secure a better deal.
Home Prices Are Still Expected To Rise
This is one of the most important takeaways from the entire forecast. Even though sales activity has slowed, experts did not lower their home price forecast on average.
They still expect home prices to rise nationwide this year.
Why? Because even though buyer demand has cooled a bit, the overall number of homes for sale is still fairly limited. That imbalance is what’s helping keep prices supported, 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 expecting steady home price growth rather than a significant decline. That should offer some reassurance whether you’re buying or selling.
Because sellers don’t want prices to fall significantly. And while buyers might think they do, most people actually feel more confident making a big purchase when they know it won’t lose value right away.
Bottom Line
The housing market didn’t bounce back as fast as experts expected, but that doesn’t mean it’s stopped moving.
Higher inflation and ongoing economic uncertainty led economists to lower their forecasts for the year. Still, most experts expect the market to pick back up once those issues ease.
Don’t read this forecast revision as a sign of trouble. Think of it as a temporary response to current conditions and uncertainty.
If you want to know what’s happening in our local market and how it could affect your plans for the rest of the year, let’s connect.
