Home sale expectations tempered for second half of 2026
The market should continue to plod along, with slight gains expected compared to last year as buyers and sellers continue “adjusting and showing up.”
With mortgage rates expected to remain elevated, economists aren't predicting any big upswings in the housing market during the second half of the year.
That doesn't mean the market will grind to a halt, but slow spring sales have led some forecasters to rethink their numbers.
Down, down, down: Compared to its December forecast, Realtor.com's newly released midyear update is rather gloomy. Home price growth is expected to slow to 1.2%, down from the 2.2% previously predicted, and existing home sales are now forecast to increase by just 1% this year, down from 1.7%.
Inventory won't be as strong as originally forecasted either: Realtor.com estimates that supply will be up 3.6% by the end of 2026, a significant downward revision from December's expectation of 8.9%.
The one prediction that didn't change was the 30-year mortgage rate, which Realtor.com still expects to be 6.3% at the end of 2026.
Despite the changes, Realtor.com Chief Economist Danielle Hale said the market is still inching forward as sellers reset expectations and price growth cools. "Looking ahead, we expect momentum to build through the second half of the year as more sidelined buyers and sellers find terms that work for both sides," Hale said.
'Slow, consistent growth': In his latest weekly market report, Compass Chief Economist Mike Simonsen said he expects home sales to be slightly elevated with prices close to unchanged year-over-year. Similar to Realtor.com's revised forecast, Simonsen predicts year-end inventory levels will be about 3% higher compared to 2025.
"These are not what I'd call boom times for the housing market, but we have seen slow, consistent growth," he said.
Lawrence Yun, chief economist at the National Association of Realtors, revised his 2026 existing home sale growth forecast to 4% last month, well below the 14% jump he predicted eight months earlier.
Mortgage rates a big factor: The downward revisions in home sales are largely due to mortgage rates staying unexpectedly high. After briefly falling below 6% in February, 30-year rates shot up in conjunction with the spike in energy prices caused by the Iran war, and they've remained in a fairly tight range, hovering around 6.5% for several weeks.
The ICE Mortgage Monitor for July predicts the 30-year rate will stay about the same in the near term but drop to around 6.35% by October.
Can buyers and sellers maintain their 'staying power'? Even with sticky mortgage rates, the spring season didn't turn out to be as bad as some feared, with sales rebounding in May.
For the first half of the year, existing home sales were 0.2% ahead of last year's pace, according to the Realtor.com report. They'll need to pick up steam in the second half to hit Realtor.com's 1% forecast — which Hale believes is possible.
"Buyers and sellers have shown a lot of staying power this year," Hale said. "This is a market where people are adjusting and showing up rather than giving up. Sellers are meeting the market with more realistic asking prices, which is helping deals get done."