NAR’s Yun Predicts 14% Home Sales Increase in 2026
WASHINGTON—National Association of Realtors Chief Economist Lawrence Yun believes that with the prospect of multiple rate cuts by the Federal Reserve, interest rates next year will drop down to approximately 6%, which will finally fuel a recovery in home sales.
Yun, during NAR’s virtual Mid-Year Real Estate and Economic Outlook on July 16, said that at the moment while there are some signs of potential improvement, current data indicates a home sales recovery is still a ways off.
Yun related that home sales volume continues to be slow and is in fact below pre-COVID levels for the third consecutive year, despite the fact that there are 7 million more jobs than during the pandemic. He also stated that price appreciation has started to slow.
He admitted that the depressed sales volume for the first six months of 2025 was disappointing. The elevated mortgage interest rates at nearly 7% have caused a sharp drop in demand and therefore scuttled his earlier prediction of a stronger spring sales market.
“So far, it has been a bummer. We have not seen a recovery at the moment,” Yun said. However, he noted that there is “a little light at the end of the tunnel” in the form of increased mortgage applications. He noted that recently home mortgage applications have risen between 15% and more than 20% over last year’s totals.
Yun said that Realtors can expect anywhere from six to eight rate cuts by the Federal Reserve in the next 12 months. He also stated that a majority of analysts are betting that the Fed will reduce rates twice in 2025.
One of the more enlightening components of Yun’s presentation was the significant potential demand if current mortgage rates fall to 6%, which he believes will occur sometime in 2026. He predicts rates will average around 6.7% in 2025.
If rates do indeed fall to 6%, Yun said that another 5.5 million households could therefore qualify for the average mortgage. Based on 10% of those households pursuing the purchase of a home, that would add a potential 550,000 transactions.
Yun predicted that existing home sales would rise approximately 3% this year, but jump 14% higher in 2025. The national existing home sales price will rise by just 1% this year, but rebound to be 4% higher in 2026. He expects new home sales to increase 5% this year and again at the same level in 2026. Job gains will rise 1.6 million in 2025 and by 2 million in 2026.
