Home sales projections fall in revised 2026 forecast 

As 2026 inches closer, some forecasters are growing less optimistic about the future of home sales in the year ahead.

Fannie Mae's Economic and Strategic Research Group recently released its November forecast, which predicts overall home sales will rise 7.3% in 2026. That's down from the group's October forecast of a 8.9% boost and from its September prediction of a 9.2% jump.

The latest forecast is also much less bullish than the 14% jump in existing home sales that the National Association of Realtors has predicted.

Fannie Mae's mortgage rate forecast: One factor for the waning enthusiasm is mortgage rates, which have recently stabilized after dropping from around 7% earlier this year.

Fannie Mae is now predicting that the 30-year fixed-rate mortgage will average 6.2% in the first quarter of 2026 before dipping to 5.9% by the end of the year. Forecasters also anticipate that the 30-year rate will hang around 5.9% through 2027.

The 30-year fixed-rate is currently averaging 6.26%, according to Freddie Mac's latest weekly survey.

The Federal Reserve wild card: What actually happens with mortgage rates in early 2026 may be influenced by whether the Federal Reserve decides to continue cutting short-term interest rates at its Dec. 9-10 meeting.

While a recently released jobs report showing that the U.S. economy added 119,000 jobs in September appeared to cast doubt on a December rate cut, New York Fed President John Williams has suggested that a cut is coming — remarks that caused the stock market to rally.

"I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions," Williams said on Nov. 21 while delivering a speech in Santiago, Chile, according to CNBC. "Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals."

The persistent affordability crunch: Affordability strains would also need to ease for a boost in sales next year. While there have been some improvements lately, homebuying remains out of reach for most households, according to a recent Oxford Economics report. The likelihood of much weaker home price growth and lower mortgage rates remains relatively low, the report noted.

"Our outlook for affordability has improved, largely due to revised assumptions about home price growth," said Oxford Economics Lead Economist Nancy Vanden Houten. "However, barring significant increases in supply, prices would have to decline or mortgage rates would need to fall sharply for homebuying to become widely affordable."

Slowdown in home prices, construction expected: Fannie Mae's forecasters also expect home price growth to remain fairly stable in 2026, though at a lower level. Fannie Mae's Home Price Index is forecast to rise 1.3% in 2026, much slower than in 2024 (which saw a rise of 4.4%) and in 2025 (which is projected to have a rise of 2.5%).

Meanwhile, housing starts are forecast to remain sluggish next year, continuing the trend from 2024 and 2025. Fannie Mae's November forecast projects a 2.5% drop in total housing starts, while the estimate for 2026 in October was a drop of just 1.5%.