Mortgage rates are expected to ease to roughly 6% next year

HOUSTON, TX (November 19, 2025) – Existing-home sales are projected to rise by around 14% in 2026, according to National Association of REALTORS® Chief Economist Lawrence Yun. Yun delivered his 2026 housing outlook today during the Residential Economic Issues and Trends Forum at NAR NXT, The REALTOR® Experience, in Houston.

Yun said the expected rebound reflects easing mortgage rates, continued job gains, and improving market stability after several challenging years. Home prices are forecast to increase by 4% next year, supported by steady demand and persistent supply shortages.

“Next year is really the year that we will see a measurable increase in sales,” Yun said. “Home prices nationwide are in no danger of declining.”

Mortgage rates are projected to decline modestly, averaging around 6% in 2026. Yun emphasized that while rates are influenced by more than Federal Reserve decisions alone, broader economic factors are contributing to gradually lower borrowing costs.

“As we go into next year, the mortgage rate will be a little bit better,” said Yun. “It’s not going to be a big decline, but it will be a modest decline that will improve affordability.”

Buyers will see the greatest affordability improvements in regions with the most robust new housing supply, particularly in high-construction markets like Houston. Expanding inventory in such areas will help more first-time buyers achieve homeownership.

“Houston is creating more home construction, and therefore making home prices much more reasonable,” said Yun. “Given the job creation, buyers will inevitably be showing up to Houston once the mortgage rate goes down.”

Jessica Lautz, NAR deputy chief economist and vice president of research, presented insights from the newly released 2025 Profile of Home Buyers and Sellers, highlighting how shifting demographics are reshaping today’s housing market.

Lautz noted that the typical age of a home buyer today is 59, and the typical age of a repeat buyer is 62. She also shared that the number one reason people move today is because they want to be closer to friends and family.

“I call this the grandbaby effect,” Lautz said. “This is a different type of buyer.”

In contrast, first-time buyers continue to face steep challenges, with the share of first-time buyers hitting an all-time low of 21% and the median first-time buyer age reaching 40.

“The biggest struggle first-time buyers have is finding an affordable property, and many of them struggle to save for a down payment,” said Lautz. “The biggest source of pain that they are citing is high rent and student loan debt.”

Despite the affordability challenges, the use of real estate agents remains strong among both buyers and sellers. Lautz shared that 88% of buyers and 91% of sellers used an agent or broker in their most recent transaction.

Lautz cited the value agents provide in “pricing the home competitively in a changing market, marketing that home, and finding a qualified buyer.”

WASHINGTON — Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, according to the National Association of Realtors®. All major regions except for the West saw a significant hike in sales activity last month.

Total existing-home sales, https://www.nar.realtor/existing-home-sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million).

Lawrence Yun, NAR chief economist, says home sales in most of the country expanded at a tremendous clip in November. “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” he said. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”

The median existing-home price for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69^th straight month of year-over-year gains.

Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.

“The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” said Yun. “Price appreciation is too fast in a lot of markets right now. The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

First-time buyers were 29 percent of sales in November, which is down from 32 percent both in October and a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released earlier this year – revealed that the annual share of first-time buyers was 34 percent.

Matching the highest share since May, all-cash sales were 22 percent of transactions in November, which is up from 20 percent in October and 21 percent a year ago. Individual investors, who account for many cash sales, purchased 14 percent of homes in November, up from 13 percent last month and unchanged from a year ago.

“The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” said Yun. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”

Properties typically stayed on the market for 40 days in November, which is up from 34 days in October but down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.

Realtor.com®’s Market Hotness Index, measuring time on the market data and listings views per property, revealed that the hottest metro areas in November were San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Stockton-Lodi, Calif.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage increased for the second straight month to 3.92 percent in November from 3.90 percent in October. The average commitment rate for all of 2016 was 3.65 percent.

On the topic of tax reform, NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says it’s good news homeowners can continue to count on tax incentives such as the mortgage interest deduction and the state and local tax deduction.

“Only 6 percent of homeowners have mortgages exceeding $750,000, and only 5 percent pay more than $10,000 in property taxes, but most homeowners won’t itemize under the new regime,” she said. “While we’re pleased that important homeownership incentives such as the capital gains exclusion survived in conference, additional changes are required to truly incentivize homeownership in the tax code.”

Distressed sales⁶ – foreclosures and short sales – were 4 percent of sales for the fourth straight month in November, and are down from 6 percent a year ago. Three percent of November sales were foreclosures and 1 percent were short sales.

Single-family and Condo/Co-op Sales

Single-family home sales grew 4.5 percent to a seasonally adjusted annual rate of 5.09 million in November from 4.87 million in October, and are now 3.2 percent above the 4.93 million pace a year ago. The median existing single-family home price was $248,800 in November, up 5.4 percent from November 2016.

Existing condominium and co-op sales increased 14.3 percent to a seasonally adjusted annual rate of 720,000 units in November, and are now 7.5 percent above a year ago. The median existing condo price was $242,500 in November, which is 8.8 percent above a year ago.

Regional Breakdown

November existing-home sales in the Northeast leaped 6.7 percent to an annual rate of 800,000, (unchanged from a year ago). The median price in the Northeast was $273,600, which is 4.0 percent above November 2016.

In the Midwest, existing-home sales jumped 8.4 percent to an annual rate of 1.42 million in November, and are now 6.8 percent above a year ago. The median price in the Midwest was $196,100, up 8.8 percent from a year ago.

Existing-home sales in the South expanded 8.3 percent to an annual rate of 2.34 million in November, and are now 4.0 percent higher than a year ago. The median price in the South was $216,200, up 4.8 percent from a year ago.

Existing-home sales in the West declined 2.3 percent to an annual rate of 1.25 million in November, but are still 2.5 percent above a year ago. The median price in the West was $375,100, up 8.2 percent from November 2016.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Limited Supplies of Homes on the Market Holding Back Sales Growth

WASHINGTON, DC — After five consecutive months of increases, pending home sales slipped in June but remained near May’s level, which was the highest in over nine years, according to the National Association of Realtors®. Modest gains in the Northeast and West were offset by larger declines in the Midwest and South.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, fell 1.8 percent to 110.3 in June but is still 8.2 percent above June 2014 (101.9). Despite last month’s decline, the index is the third highest reading of 2015 and has now increased year-over-year for ten consecutive months.

Lawrence Yun, NAR chief economist, says although pending sales decreased in June, the overall trend in recent months supports a solid pace of home sales this summer. “Competition for existing houses on the market remained stiff last month, as low inventories in many markets reduced choices and pushed prices above some buyers’ comfort level,” he said. “The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows.”

According to Yun, existing-home sales are up considerably compared to a year ago despite the share of first-time buyers only modestly improving¹. The reason is that the boost in sales is mostly coming from pent-up sellers realizing their equity gains from recent years.

“Strong price appreciation and an improving economy is finally giving some homeowners the incentive and financial capability to sell and trade up or down,” adds Yun. “Unfortunately, because nearly all of these sellers are likely buying another home, there isn’t a net increase in inventory. A combination of homebuilders ramping up construction and even more homeowners listing their properties on the market is needed to tame price growth and give all buyers more options.”

The PHSI in the Northeast inched 0.4 percent to 94.3 in June, and is now 12.0 percent above a year ago. In the Midwest the index declined 3.0 percent to 108.1 in June, but is still 5.0 percent above June 2014.

Pending home sales in the South also decreased 3.0 percent to an index of 123.5 in June but are still 7.8 percent above last June. The index in the West increased 0.5 percent in June to 104.4, and is now 10.4 percent above a year ago.

The national median existing-home price for all housing types in 2015 is expected to increase around 6.5 percent to $221,900, which would match the record high set in 2006. Total existing-home sales this year are forecast to increase 6.6 percent to around 5.27 million, about 25 percent below the prior peak set in 2005 (7.08 million).