Housing Market Update: The Good News Inside a Revised Forecast

If the housing market has felt confusing in the first half of 2026, that is a reasonable reaction – and buyers and sellers in North County are not the only ones trying to make sense of it. A lot changed in the first six months of this year. This mid-year housing market update explains what shifted, what stayed the same, and why the picture is not as grim as some headlines suggest.

Back at the end of 2025, economists were forecasting a much stronger 2026. They expected mortgage rates to fall more dramatically, affordability to improve, and home sales to rebound. But lingering inflation, economic uncertainty, and geopolitical tensions pushed rates higher than expected. And because rates stayed elevated longer, many buyers continued to hold off. That is why experts recently revised their forecasts for the rest of 2026. Here is what this housing market update shows – and what it actually means for you.

Mortgage Rates May Remain Elevated

While most people were hoping rates would return to the upper 5s or low 6s seen at the start of the year, that is not what experts are projecting right now. Forecasts have been revised upward from the low 6s originally projected. Many industry organizations now expect rates to stay in roughly the mid 6s for the rest of 2026. The good news is that is still lower than where rates were a year ago. That could change if geopolitical tensions ease or inflation drops – but if you are waiting for significantly lower rates, this housing market update suggests that strategy may not pay off as quickly as you are hoping.

Existing Home Sales Revised Lower

Back in late 2025, experts expected roughly 4.5 million existing home sales in 2026. That number has been revised down to about 4.2 million. Higher rates have made monthly payments harder to manage – especially for first-time buyers – and that has slowed the pace of the market compared to original projections. But even with the revision, we are still expected to sell more homes than last year.

Once conditions ease and rates begin to settle, many experts believe a wave of waiting buyers will be ready to move. As Lawrence Yun, Chief Economist at the National Association of Realtors, explains: “There is sizable pent-up demand that could be released into the market.” Pending home sales have already been improving month over month – a sign that momentum is building beneath the surface. As we have covered, summer is historically one of the stronger windows for buyers and sellers who are ready to act before that wave of competition returns.

New Home Sales Also Slowed

Builders also expected a stronger year. Earlier forecasts projected new home sales topping 700,000. Economists now expect the number to come in just shy of that – again, largely because of elevated mortgage rates. The upside for buyers is that builders may be more motivated to sell, which means incentives, negotiation opportunities, and pricing flexibility may continue in many markets. If you are in an area with significant new construction, this could actually be a bright spot.

What This Housing Market Update Shows About Home Prices

This is one of the most important takeaways from the entire revised forecast. Even though sales activity has slowed, experts did not revise their home price outlook downward. Nationally, prices are still expected to rise this year.

Why? Because even though buyer demand has softened, the number of homes for sale is still relatively limited overall. As we have covered in detail, housing inventory in 2026 has grown – but not enough to dramatically shift the balance on price. That imbalance continues to support prices even in a slower market. We also touched on this recently in our look at lower asking prices – while asking prices have eased slightly, the underlying price trend nationally remains stable and steady.

That should be a comfort whether you are buying or selling. Sellers do not want prices to drop significantly. And buyers who purchase today generally feel better about their decision when their home holds its value rather than depreciating right away.

Bottom Line

The housing market has not rebounded as quickly as experts originally hoped – but it has not stalled either. Do not read this housing market update as a sign of trouble. Read it as a temporary pause driven by inflation and uncertainty, not a permanent shift in direction. When those conditions ease, many experts believe the market will regain its momentum quickly.

If you want to know what the mid-year picture means specifically for buying or selling in North County, let’s connect and talk through what the rest of 2026 could look like for you.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Jess & Co. Real Estate, LLC does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Jess & Co. Real Estate, LLC will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.