This year got off to a slow start for homeowners and buyers. But the National Association of Realtors (NAR) chief economist Dr. Lawrence Yun said last week that he expects the 2026 housing market to blossom.
Yun predicts that existing-home sales will increase 4% this year, with the median home price also climbing 4%. He also forecasts that homeowners generally will continue to build their net worth in 2026, with the average home contributing about $16,000 to that.
"Homeowners will continue to build wealth, while renters are simply spinning their wheels," Yun said. He was addressing the Residential Economic Issues and Trends Forum at the 2026 REALTORS Legislative Meetings.
It Depends Where You Live
We can never cover nationwide housing market data or forecasts without stressing the geographical variations that exist across the United States. It's pretty much inevitable that people in some states, cities, and even neighborhoods will experience wildly different outcomes — for better or worse — than the national average.
And even within micro markets, owners can have different experiences. "I’ve been traveling around the nation this year, and I am hearing a lot from you that it’s a really wonky market," Dr. Jessica Lautz, Yun's deputy, told her audience of Realtors.
"You’ll list a home on the market, and sometimes it’ll sit for months," Lautz continued. "And sometimes it’s going to have multiple offers, and they can be next door to each other."
Lautz said the 2026 housing market in some places feels gridlocked, while elsewhere "distinct buyer segments are actively purchasing, whether driven by necessity, determination or housing equity.
It's the Economy, Stupid!
“It’s the economy, stupid” was a phrase coined by James Carville in 1992, when he was advising Bill Clinton in his successful run for the White House. But it applies to housing markets just as much as presidential campaigns. For homeowners to thrive, the economy must do well.
A rosier outlook for the economy was likely behind Yun's forecasts for the housing market. He expects the United States to avoid a recession this year. And he thinks the economy will add 400,000 new jobs in 2026, while the unemployment rate will remain below 5%.
Meanwhile, some good news from the peace talks between the United States and Iran in Switzerland is (on Jun. 23, at least) sending oil prices lower, which could ease inflationary pressures — as long as the negotiations remain relatively cordial. Of course, Yun didn't know about this latest development when he was building the models on which his forecasts are based.
What About Mortgage Rates?
Mortgage rates might have been a drag on Yun's 2026 housing market forecasts. He expects those for a 30-year fixed-rate mortgage to average 6.5% this year, despite their having dropped to just under 6% immediately before the Iran conflict began.
And he's not alone. On Jun. 22, the Mortgage Bankers Association (MBA) released its latest rate forecasts. And it, too, expects mortgage rates to average 6.5% this year — as well as in 2027 and 2028! Those first-time buyers waiting for lower rates may be hanging around for a very long time.
Fannie Mae's latest forecast, prepared Jun. 10, is slightly more optimistic. It expects that same rate to average 6.3% this year, and the same in 2027.
Why are these forecasts so cautious? It's because few economists expect consumer price rises to reverse or even just slow down significantly anytime soon. Major supply chain disruptions can't just be turned off and on again like a struggling smartphone.
Yes, gas prices will quickly fall if a peace deal holds, but even if they do, they're unlikely to return to pre-war levels for many months — perhaps a year or more. We doubt most other prices will fall at all, although the pace of some increases might slow. But others, especially for food, may surge as the impact of fertilizers and fertilizer ingredients being held up in the Strait of Hormuz hits global harvests.
Mortgage rates are highly sensitive to inflation, which may keep them from falling for years, as the MBA believes.
The Usual Caveat
It's time again to trot out our favorite quotation: "The only function of economic forecasting is to make astrology look respectable." That was coined by the late Harvard economist John Kenneth Galbraith.
Nowadays, economists use the most sophisticated computing models to make their forecasts. But they're all necessarily based on assumptions that may or may not come true.
Still, these expert analyses are the best we've got, and are typically superior to licking our fingers to see which way the economic winds are blowing.
