March 10, 2026
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Existing home sales rose 1.7% in February to 4,090 thousand after sinking 5.9% in January. Our expectation is that slow but steady increase in jobs will boost income, mortgage rates will decline slowly in the months ahead, and prices should also decline slightly. As a result we expect home sales to pick up somewhat in 2026.
Lawrence Yun, NAR chief economist said that, “Housing affordability is improving, and consumers are responding. Still, there is a long way to go to return to pre-pandemic levels of transaction activity. There are more than 6 million more jobs than in 2019, yet home sales per year are down by one million.” He added that, “Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains. Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.” Finally, he said that, “Inventory is growing, but sluggishly. If demand picks up notably in the coming months and outpaces supply growth, home prices will inevitably rise. That is why increasing supply is so important to help limit home price growth, improve housing affordability, and boost transactions.”
Mortgage rates are currently 6.0%. We believe inflation will decline slowly in the months ahead which should keep mortgage rates edging their way lower throughout 2026 to 5.6% by the end of the year..
The average home sat on the market for 47 days in Febuary compared to 46 days in January.. That is still a relatively short time period by any historical standard. A decade ago homes would routinely sit on the market for 3 months or so. Also, this number is not adjusted for seasonal movements and the number of days on the market always peaks in January or Februarty. It will start to decline in the spring and continue through July.
There are still few homes available for sale but the inventory has been increasing. The number of homes on the market is now at 3.8 months. But it should rebound in the months ahead. The inventory remains short of the 5.0 month supply that is required to balance the demand for and supply of homes. As mortgage rates decline more and more homeowners who have been reluctant to sell will put their houses back on the market. Eventually it will get back to the desired 5.0 month supply.
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The shortage of homes available for sale is preventing a sharp drop in home prices. Home prices rose 0.8% in February to $398,000 after having fallen 2.5% in January. The year-over-year change which is now 0.8% and seems to be headed lower (see red line).
Housing affordability is dependent on three factors — home prices, mortgage rates, and consumer income. Jobs growth is climbing slowly which boosts consumer income, Mortgage rates are declining slowly. And home prices are also beginning to decline slowly. As a result, housing affordability should climb and the median-income earning family will have about 30% more income than required to purchase a median-priced home by the end of 2026.
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Given all of the above we expect existing home sales to rise about 2.0% in 2026 to 4,350 thousand by the end of the year.
GDP rose 1.4% growth in the fourth quarter as the government shutdown took its toll. We expect to see 2.5% GDP growth in the first quarter and 2.7% growth.for the year as a whole.
Stephen Slifer
NumberNomics
Charleston, S.C.
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