CHM Blog

Will 2026 finally provide a real estate surge?

After a year of stagnant sales and frustrated buyers, the housing market might finally be ready to shake the dust off its shoes. According to Lawrence Yun, chief economist at the National Association of Realtors, 2026 could bring the surge that so many have been waiting for—with home sales potentially jumping 14% nationwide.

Yun shared this optimistic forecast in Houston at the Residential Economic Issues and Trends Forum during NAR NXT, The Realtor Experience. He told attendees that next year is really when we'll see a measurable increase in sales activity. The sale of newly constructed homes are also expected to rise 5% next year, while home prices should climb 4% nationally. That means sellers won't sacrifice appreciation for volume.

The rebound groundwork is evidently being laid now, with mortgage applications running consistently above last year's levels, signaling strong buyer interest. According to Realtor.com’s Melissa Dittmann Tracey, the Mortgage Bankers Association recently reported that purchase applications surged 31% higher compared to the same week a year ago. Job gains remain steady, homebuilders continue adding supply, and the record-breaking 43-day government shutdown that may have delayed some recent sales is finally behind us until another one raises its head, which many say is unlikely.

Mortgage rates remain the biggest bugaboo for buyers. Yun expects gradual improvement ahead, with the Federal Reserve already having initiated rate cuts. Yun cautioned that mortgage rates respond to many factors—including inflation, Treasury yields, and federal borrowing—so buyers shouldn't expect a return to 3% rates. Still, even modest decreases could unlock substantial activity.

But this recovery won't look the same everywhere. The upper end of the market has been performing much better than entry-level segments, with sales in the $750,000 to $1 million range showing some of the largest gains. NAR Deputy Chief Economist Jessica Lautz described a widening gap between haves and have-nots, as evidenced by the percentage of first-time buyers having dropped to an all-time low of 21%—far below their historical 40% norm. And buyers are older than ever, with a median age of 40. Tracey surmises that high rent, student loans, and childcare costs continue blocking their path.

Meanwhile, repeat buyers, especially baby boomers with substantial equity, are dominating the market. For sellers navigating seasonal slowdowns, pricing correctly has become crucial. Yun noted that homes lingering on the market now require price reductions to attract buyers—averaging anywhere from 4.9% cuts for properties listed under 14 days to 13.8% reductions for those sitting over 120 days.

Despite challenges, housing fundamentals remain solid. Mortgage delinquencies hover at historical lows, homeowners hold substantial equity, and job growth continues steadily. Tracey reports, “While 2025 was mostly stagnant, conditions for meaningful recovery appear to be falling into place.”

Realtor, TBWS

How Rates Move:

Conventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up. Tracking these securities real-time is critical. For more information about the rate market, contact me directly. I'm among few mortgage professionals who have access to live trading screens during market hours.

Rates Currently Trending: Neutral

Mortgage rates are getting some support today. The MBS market worsened by -33 bps last week. This was enough to increase mortgage rates or fees. The market experienced high volatility last week.

This Week's Rate Forecast: Neutral

Three Things: These are the three areas that have the greatest ability to impact rates this week. 1) Jobs 2) The Fed and 3) Treasury Auction.

1) Jobs: We will finally get a jobs report out of the BLS. It will hit on Thursday and will be for September. So, its quite old data but it fills a big void. This week we will get Initial Jobless Claims, Continuing Claims, ADP weekly, NFP, Unemployment Rate, Average Hourly Earnings, Average Hourly Workweek, U6 Underemployment Rate, Laborforce Participation Rate.

2) The Fed: We have another week with a lot of Fedspeak. So far, they seem split on a cut in December while keeping the door open for one at the same time.

11/17 Williams, Jefferson, Kashkari, Waller.

11/18 Logan, Barr, Barkin.

11/19 FOMC Minutes, Atlanta Fed Business Inflation Expectations.

11/20 Hammack, Goolsbee.

11/21 Williams, Logan.

3) Treasury Auction: We have an important 20 Year Treasury Bond auction on Wednesday.

This Week's Potential Volatility: High

This morning markets are seeing some support. Volatility has started at moderate levels but will increase later in the week on the jobs data.

Bottom Line:

If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.

Richard Sardella has been actively managing and providing services in the mortgage industry for over 30 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.

All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

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