NAR Predicts Mortgage Rates to Remain Above 6% in 2025 and 2026

Thinking about buying a house in the next few years? Well, here's something important you need to know straight away: NAR (National Association of Realtors) predicts mortgage rates will likely stay above 6% through 2025 and 2026. This isn't exactly the news homebuyers were hoping for, especially after seeing those super low rates not too long ago. But let's break down what this quarterly economic forecast really means for you, the housing market, and your homeownership dreams.

NAR Predicts Mortgage Rates to Remain Above 6% in 2025 and 2026

Mortgage Rates: Easing Down, But Don't Expect a Plunge

One of the biggest questions on everyone's mind is, “What's going to happen with mortgage rates?” We've seen them bouncing around quite a bit lately, and it definitely impacts what you can afford and what you might consider doing in the market. The NAR's latest forecast offers a bit of good news here. They're predicting that mortgage rates will gradually come down. Specifically, they anticipate an average of 6.4% in 2025 and then a further dip to 6.1% in 2026.

Now, before you start celebrating and dreaming of those super-low rates we saw a few years back, it's important to manage expectations. NAR Chief Economist Lawrence Yun rightly pointed out that while the Federal Reserve is anticipating slower economic growth – which usually puts downward pressure on rates – our high national debt will likely prevent mortgage rates from falling too dramatically. He specifically mentioned that we shouldn't expect to see rates return to the 4%-to-5% range we experienced during the Trump administration's first term.

In my opinion, this is a realistic outlook. We're not going back to ultra-low rates anytime soon. However, a gradual decline to the 6% range is still a positive step. It can make homeownership more attainable for some buyers and potentially ease some of the pressure in the market. It's a moderate improvement, not a game-changer, but definitely welcome.

Home Sales: Brighter Days Ahead for Both Existing and New Homes

If you've been following the housing market, you know that sales of existing homes have been a bit sluggish. High mortgage rates have definitely played a role in this. But the NAR forecast paints a more optimistic picture for the coming years. They predict a 6% increase in existing-home sales in 2025 and a more substantial 11% jump in 2026. That's a significant acceleration!

What's driving this optimism? Lower mortgage rates, even slightly lower, can bring more buyers back into the market. As affordability improves, even incrementally, more people will be able to qualify for a mortgage and pursue their homeownership dreams. This pent-up demand, combined with potentially more inventory as homeowners become more comfortable listing their properties, could fuel this sales growth.

The forecast is also positive for new-home sales. NAR anticipates a 10% rise in 2025 and another 5% increase in 2026. Interestingly, the report mentions that the new-home sales market has plentiful inventory. This is a key differentiator from the existing home market, which has often struggled with low inventory in recent years. Builders seem to be in a good position to meet demand as rates moderate, offering buyers more options and potentially contributing to overall market stability.

From my experience, a healthy mix of both existing and new home sales is crucial for a balanced market. It gives buyers more choices and helps to keep prices in check. This forecast suggests we're moving in a direction that should support a more balanced and active market.

Home Prices: Steady Growth, But Not Skyrocketing

Let's talk about home prices – another hot topic! The NAR forecast suggests that we can expect continued price growth, but at a more moderate pace. They are predicting a 3% increase in the national median home price in 2025 and 4% in 2026.

This is a far cry from the double-digit price appreciation we saw during the pandemic boom. In my view, this moderation is a good thing. Sustained, but slower, price growth is healthier for the long-term stability of the housing market. It prevents bubbles and makes homeownership more sustainable over time.

Lawrence Yun highlights that this moderation in price growth is expected due to more supply coming onto the market. As mentioned earlier, both new construction and potentially more existing homeowners listing their properties will contribute to increased inventory. When there are more homes available, it naturally takes some pressure off prices.

Yun also points out a very important factor: “Having income and wages rise faster than home prices is welcome to improve affordability.” This is the key to long-term housing affordability. If incomes grow at a faster rate than home prices, it gradually becomes easier for people to afford homes. This is a positive trend that the NAR forecast seems to anticipate.

Personally, I believe this forecast is pointing towards a more sustainable and balanced housing market. We're moving away from the extremes of rapid price growth and ultra-low rates. Instead, we're looking at a market where rates are easing slightly, sales are increasing, and prices are growing at a more manageable pace. This isn't a boom market, but it's certainly not a bust either. It's a market of opportunity for both buyers and sellers who are realistic and well-informed.

Here's a quick summary of the NAR Quarterly Forecast:

Forecast Category	2025	2026
Existing Home Sales	+6%	+11%
New Home Sales	+10%	+5%
Median Home Price	+3%	+4%
Mortgage Rate (Average)	6.4%	6.1%
Job Gains	1.6 million	2.4 million

Nationwide Forecast

Keep in mind, this is a nationwide forecast. Local markets can and will vary. It's always crucial to consult with a local real estate expert to understand what's happening in your specific area. But overall, the NAR Quarterly Forecast provides a valuable glimpse into the likely direction of the housing market, suggesting a path towards greater stability and opportunity in the years ahead.