Home sales to jump nearly 10% in 2026, forecasters say
Mortgage rates are also expected to fall to 5.9% by the end of next year, according to Fannie Mae’s September Economic and Housing Outlook.
Key points:
- Fannie Mae’s Economic and Strategic Research Group is forecasting an annualized existing home sales rate of 4.446 million by the end of 2026, well above the 2025 forecast total of around 4 million.
- Researchers are also predicting a slow, steady decline in mortgage rates, with 30-year rates expected to fall below 6% by the end of 2026.
- Whether this occurs will depend on if financial conditions for consumers improve next year — especially when it comes to housing affordability.
A Fannie Mae forecast group is becoming more bullish in its prediction that 2026 will be the year home sales finally bounce back.
The organization's Economic and Strategic Research Group now forecasts overall home sales — new and existing — will be 9.2% higher at the end of 2026 compared to the end of 2025. Existing home sales are expected to be at an annualized rate of 4.446 million at the end of 2026, up 9.6% compared to forecasts for the end of this year.
While the September 2025 Economic and Housing Outlook is similar to predictions researchers made back in June for 2026, it is more hopeful than their February forecast, which anticipated a 6.1% overall increase and a 6.7% rise in existing home sales next year.
The group also forecasts a steady decline in 30-year mortgage rates, which have fallen in recent weeks. It expects the rate to be at 6.4% by the end of 2025 and 5.9% by the end of 2026.
What's needed for a market resurgence?
A market rebound will depend largely on improving financial conditions in the housing market, said Odeta Kushi, deputy chief economist at First American.
"In 2026, modest improvements in affordability — driven by rising inventory, moderate price growth, and potential mortgage rate relief — could support a gradual rebound in home sales," Kushi said in an email.
"While financial conditions are a key part of the equation, lifestyle factors like the five D's (diplomas, diapers, divorce, downsizing, and death) will continue to play a major role in driving housing decisions, regardless of market dynamics," Kushi added.
For real estate agents, it's been a long slog. The last time the annualized rate for existing home sales was in the 4.5 million range was October 2022 — and there have been several months since then when the rate was below 4 million.
First-time buyers still aren't catching a break
Affordability remains one of the reasons that home sales are expected to hit a 30-year low by the end of 2025. According to First American's Sept. 23 First-Time Home Buyer Outlook Report, only 26% of homes were affordable for median renters in the second quarter of 2025 — down from 28% in late 2024.
Released weeks after the start of the NFL season, First American's report broke down affordability for first-time buyers by NFL divisions. The AFC South (Jacksonville, Florida; Indianapolis; Houston; Nashville, Tennessee) placed first with 26% of homes affordable for the median renter. The NFC West (Phoenix; Seattle; San Francisco; Los Angeles) was last with just 8% of homes affordable for the median renter.
But the affordability picture is changing — and that could lead to the jump in home sales that Fannie Mae forecasters expect.
"Mortgage rates have moderated, incomes continue to rise and house price growth is slowing — all signs that the affordability chains may be moving in the buyers' favor," said Mark Fleming, chief economist at First American.