Good Monday Morning!

There is a huge pent-up demand for housing in the United States, yet the national housing market remains stagnant. Why is that? It all boils down to one primary factor: home affordability.

Yes, mortgage interest rates are higher now than they have been over the past 5–7 years, but that’s not the only issue. Inflation in home prices, goods, and services—combined with stagnant wages—are also major challenges for would-be homebuyers. High construction costs, elevated land prices, and rising property taxes further contribute to the problem.

Altogether, these factors put homeownership out of reach for many. This, in turn, forces potential buyers to remain renters—and with rent prices also high, it becomes increasingly difficult to save enough for a down payment in today’s market.

According to a study by the National Association of Realtors, a decrease in mortgage rates to 6% could add an estimated 5.5 million buyers to the housing market. With inflation slowing and wages likely to increase, a reduction in interest rates could be the catalyst we need to restore home affordability.

Here’s a recent article from the National Association of Realtors that speaks to our current national housing market.

 

So, Should Buyers Wait?

Buyers who are holding out for lower mortgage rates may be missing a key opening in the market. Following years of declines, housing inventories are finally rising across the country, giving once inventory-starved metros more options for prospective buyers. 

Nationally, inventory of existing homes was up 20% in May compared to a year earlier—but some markets saw even sharper increases, with inventory levels up as much as 80% annually, Yun said. As a result, home shoppers may find they have more bargaining power than in recent years. 

While home prices are still rising, the pace has slowed significantly compared to recent years. Some real estate professionals are even reporting more price drops, as seller competition heats up. 

NAR predicts that, on a national basis, home prices will rise modestly—by about 1% in 2025—before accelerating to a projected 4% increase in 2026. NAR economist Yun noted that current homeowners remain the biggest beneficiaries of the housing market, enjoying record-high real estate net worth. “Through real estate, more Americans are gaining financial security,” Yun said. “Real estate net worth is on solid ground, based on the low delinquency rate and even lower foreclosure rate conditions.”

Using NAR’s new dashboard, members can see just how owners in their market have benefited. In Phoenix, for example, homeowners gained an average of $320,860 in equity over 10 years of ownership—wealth that non-homeowners are missing out on.

The Housing Forecast: 2025 and 2026

Because mortgage rates remain stagnant, NAR downgraded its housing forecast for the remainder of 2025—but upgraded its forecast for 2026 on the expectation that rates will begin to come down. Yun presented the following outlook for the housing market:

Existing-home sales:

  • 2025: +3%
  • 2026: +14%

New home sales:

  • 2025: +5%
  • 2026: +5%

Median home prices:

  • 2025: +1%
  • 2026: +4%

Mortgage rates:

  • 2025: 6.7%
  • 2026: 6%

Jobs:

  • 2025: +1.6 million
  • 2026: +2 million

Have An Awesome Week!

Stay Healthy!  Stay Safe!  Remain Positive!  Trust In God!

 

Galand Haas

galand@galandhaas.com

541.349.2620