Key Details:
- At NAR’s mid-year Forecast Summit, Chief Economist Lawrence Yun downgraded his 2025 home sales forecast from 6% to 3%, citing persistently high mortgage rates.
- But if rates fall to 6%, Yun predicts a 14% jump in sales for 2026 and 550,000 additional transactions over 12 to 18 months.
- First-time buyers now make up just 24% of sales, but winter may offer them a strategic edge.
The housing market didn’t deliver the rebound many hoped for this spring. Rates stayed high, inventory stayed tight, and the gap between buyer interest and buyer action never fully closed.
But if you’re looking for a forward-facing update to share with your clients, we’ve got the highlights from NAR’s latest forecast.
During the National Association of REALTORS®’ (NAR) Forecast Summit on July 16, NAR Chief Economist Dr. Lawrence Yun acknowledged that 2025 won’t be the comeback year many predicted.
But 2026? That’s a different story, at least if rates fall where economists think they will.
A Reset on Expectations for 2025
At the start of the year, Yun was bullish. In November 2023, he predicted a 9% increase in home sales for 2025. That got downgraded to 6% in March. Now, as of last week’s summit, the forecast has dropped again.
Dr. Yun’s current prediction: a 3% increase in home sales for 2025.
What happened? Mortgage rates didn’t budge in the spring, staying closer to 7% when many economists expected a drop.
Yun even admitted, “So far, it’s been a bummer.”
Still, he emphasized that even with the revised forecast, the expectation is for sales to climb next year, not fall. And there’s a much more optimistic scenario on the horizon.
A 14% Jump in 2026?
If mortgage rates fall to 6% by the end of this year and stay there, Dr. Yun believes 2026 could bring a major surge in buyer activity.
“The assumption is we’re not going to face a recession despite all this discussion of tariffs. The stock market is hovering around all-time highs, which could lead to business community investment.”
In that scenario, home sales could jump 14% in 2026, fueled by a wave of pent-up demand finally meeting improved affordability.
550,000 More Sales? NAR’s New Tool Says It’s Possible
At the Forecast Summit, Dr. Yun also walked through data from NAR’s newly released Market Statistics Dashboard. The tool helps agents visualize how rate changes could affect demand in their local market.
Based on national projections, a sustained drop in mortgage rates to 6% could lead to 550,000 additional home sales within 12 to 18 months. That number reflects:
- The number of households that could afford to buy at that rate
- The share of those households likely to make a move
- How affordability directly translates to increased transaction volume
The dashboard also breaks down metro-level insights agents can share with clients, including trends in pricing, inventory, and demographics.
“Real Estate Is on Very Solid Ground”
While the downgrade to 2025 sales is disappointing, Dr. Yun stressed that the market’s foundation remains strong.
“Real estate is on very solid ground,” he said, citing high equity levels, low delinquency rates, and a large number of households that own their homes outright.
In other words, this isn’t a crash. It’s a slowdown driven by affordability challenges, not instability.
First-Time Buyers Are Struggling, but There’s a Seasonal Advantage
Also speaking at the Forecast Summit was NAR Deputy Chief Economist Dr. Jessica Lautz, who focused on the continued decline of first-time buyers.
Right now, they represent just 24% of all home purchases. That is the lowest share ever recorded, and it’s primarily due to affordability.
While that puts agents in a tough spot, Dr. Lautz pointed to research showing an advantage for first-timers shopping in the off-season:
“They have a little more to work with when they think about the competition in the market, and their offer may actually be seen.”
Her recommendation? Encourage first-time buyers to shop in Q4. The winter months offer less competition and may increase the odds of getting an offer accepted, especially when buyers don’t have equity to work with.
Key Takeaways for Agents
- NAR now projects a 3% increase in home sales for 2025, not 6% or 9% as forecast earlier this year
- If mortgage rates drop to 6%, NAR expects 550,000 more home sales within 12 to 18 months and a 14% increase in 2026
- Market fundamentals remain strong, even with slower activity in 2025
The message for clients and content: the market may feel sluggish now, but the underlying health is strong. If rates improve, we’re poised for a powerful rebound in 2026.
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