Mid-Year Housing Market Update: What the Revised 2026 Housing Forecast Means for Buyers and Sellers

If the housing market feels confusing right now, you’re not alone.

Mortgage rates have risen. Home sales haven't picked up like expected. And many buyers and sellers are wondering when things are going to feel easier or be more affordable.

The truth is: a lot changed over the first half of this year.

Back at the end of 2025, economists were forecasting a much stronger housing market for 2026. They expected mortgage rates to come down, affordability to improve more dramatically, and home sales to rebound.

But lingering inflation, economic uncertainty, and growing geopolitical tensions overseas pushed mortgage rates higher than expected. And because rates stayed elevated for longer, many buyers continued to hold off.

 

Why Housing Market Forecasts Changed in 2026

That’s why experts recently revised their housing forecasts for the rest of the year (see graph below):

So, what does this actually mean for you? Let’s break it down.

 

Mortgage Rates May Remain Higher Than Expected

While just about everyone wants mortgage rates to go back to the upper 5s or low 6s we saw at the start of the year, as of right now, the experts don’t think that’s likely to happen this year.

Instead, forecasts have been updated from the low 6s they originally projected. Many industry organizations are saying rates will stay in roughly the mid 6s this year. The good news is, that’s still lower than rates were a year ago.

Of course, this is based on what we know today. If the conflict overseas comes to an end or inflation drops, this could change. But if you’re waiting for lower rates, it may not pay off in the way you expect.

 

Existing Home Sales Forecast Revised Lower

Back in late 2025, experts expected we’d sell an average of 4.5 million homes this year. Now? That’s dropped down a bit to 4.2 million.

That tells us something important: buyers are still hesitant because affordability remains challenging.

Higher mortgage rates have made monthly payments harder to manage, especially for first-time buyers. And that’s slowed the pace of the market compared to what was originally expected. But even though the forecast was revised down, we’re still expected to sell more homes than last year. 

Once geopolitical tensions resolve and rates begin to settle down, many experts believe that group of buyers will be ready to jump back in. As Lawrence Yun, Chief Economist at NAR, explains:

 

“There is sizable pent-up demand that could be released into the market.”

 

There have already been a few glimmers of renewed hope lately. In recent months, pending home sales have been improving month-over-month despite higher rates.

So, if you’re able to afford a home at today’s rates, it could still make sense to buy now. Because otherwise, if you wait, you’ll have more competition (and potentially fewer homes to choose from) when those other buyers jump back in.

 

New Home Sales Are Slower Than Originally Projected

Builders also expected to have a stronger year. Earlier forecasts projected new home sales would top 700k in 2026. Now, economists expect we'll be just shy of that number.

Again, mortgage rates are a major reason why.

But the upside for buyers is that builders may be even more motivated to sell. That means builder incentives, negotiation opportunities, and pricing flexibility may continue in many markets. So, if you live somewhere where there’s more new construction, this may actually be a bright spot for you.

Builders could be more ready to negotiate, and that gives you more leverage to get a better deal.

 

Home Prices Are Still Expected To Rise in 2026

This is one of the most important takeaways from the entire forecast. Even though sales activity is slower, on average, experts did not revise their home price forecast downward.

They still expect prices to rise nationally this year.

Why? Because while buyer demand has softened, the number of homes for sale is still relatively limited overall. That imbalance is helping support prices, even in a slower market.

Of course, conditions vary depending on where you live. Some markets are cooling more than others. But nationally, experts are still projecting steady price growth — not a major decline. And that should be a comfort whether you’re buying or selling.

Because sellers don’t want a major drop in prices. And while buyers may think they do, generally you feel better about a big purchase when it doesn’t depreciate right away.

 

Bottom Line: What the 2026 Housing Forecast Means for You

The housing market hasn’t rebounded as quickly as experts originally hoped. But that doesn’t mean it’s stalled.

Higher inflation and lingering economic uncertainty caused economists to revise their forecasts for this year. But importantly, when those factors improve, many experts believe housing market activity could gain momentum.

So don’t see this revision in forecasts as a sign of trouble. See it as a temporary reaction to overall conditions and uncertainty.

For buyers and sellers in the North San Diego County Real Estate market, local conditions often matter more than national headlines. Whether you're searching for a Home for Sale in North San Diego County, exploring Carlsbad Homes for Sale, browsing Vista Homes for Sale, or preparing your next Listing, understanding your local market is key.

Whether you're buying, selling, or exploring North San Diego County Real Estate opportunities, having access to accurate local market information can help you make more informed decisions.

Helpful Resources:

• Home Value Estimate
• Search Homes for Sale in North San Diego County
• Market Snapshot
• Mortgage Calculator
• Contact an Escondido Real Estate Agent

If you'd like to discuss your goals and how current housing market trends may impact your plans, feel free to reach out.

 

About the Real Estate Agent

Patricia Villanueva is a North San Diego County real estate professional serving buyers and sellers throughout Oceanside, Carlsbad, Vista, San Marcos, and Escondido. She provides market insights, home valuation guidance, and local real estate expertise to help clients make informed decisions in changing market conditions.

Frequently Asked Questions About the 2026 Housing Market Forecast

Why did housing market forecasts change in 2026?

Housing market forecasts were revised because mortgage rates remained higher than many experts originally expected. Inflation, economic conditions, and global uncertainty have continued to affect affordability and buyer activity, leading economists to adjust their projections for the remainder of the year.

Will mortgage rates go down in 2026?

Mortgage rates are influenced by factors such as inflation, economic conditions, and financial markets. While many industry experts publish forecasts, future rate movements are uncertain and can change as economic conditions evolve.

Are home prices expected to fall in 2026?

Many housing market forecasts project modest home price growth in 2026 at the national level, though forecasts can change as economic conditions evolve. However, real estate markets vary by location, and home price trends can differ from one market to another.

 

Disclaimer: Housing market forecasts are based on current data and expert projections and may change as economic conditions evolve. This content is for informational purposes only and should not be considered financial, legal, tax, or investment advice. Individual real estate decisions should be based on your specific circumstances and professional guidance.