Will Home Sales Rebound in 2026? A Look at a Bold Housing Forecast
Welcome to the Mortgage Research Network Podcast. We bring you the latest mortgage and real estate news 3 times a week. The audio is AI generated, but content is fact-checked by me, Tim Lucas, editor of MortgageResearch.com and a former mortgage professional. And with me is Craig Berry, a mortgage originator with 25 years experience. Craig, so here’s something to think about: in 2021, the U.S. housing market hit 6.12 million home sales. By 2024, that number had dropped to just four million. That’s a staggering decline in just three years.
That’s a huge drop. And now we’ve got Dr. Lawrence Yun, Chief Economist at the National Association of Realtors, predicting a 14% year-over-year increase in home sales in 2026. It’s a bold claim, especially after such a rough few years. What’s driving his optimism?
Well, Yun’s argument is rooted in historical patterns. He pointed out that when the housing market recovers after a downturn, double-digit rebounds are actually pretty common. So, he’s framing this as less of a bold prediction and more of a return to normalcy.
That makes sense, but the numbers we’re coming off of are pretty grim. Like you said, home sales dropped from 6.12 million in 2021 to four million in 2024. And then in 2025, we saw another 4.4% decline. It’s been a steady downward trend.
Exactly, and Yun attributes much of this downturn to rising interest rates. Back in 2021, mortgage rates were below 3%. That’s incredibly low and made homebuying much more affordable. But by November 2023, rates had climbed to nearly 8%. That’s a massive shift in just two years.
And it’s not just first-time buyers who were affected. Higher rates made it harder for them to afford homes, but it also discouraged existing homeowners from selling. If you’ve locked in a mortgage rate of 3%, why would you sell and take on a new loan at 7% or 8%? Your monthly payments would skyrocket.
Right, and that created a kind of gridlock in the market. People who might have otherwise sold their homes and moved up or downsized just stayed put because it didn’t make financial sense to move. And that lack of inventory only made things tougher for buyers.
And then there’s the capital gains tax issue. Yun brought up the current exemptions—$250,000 for single filers and $500,000 for married couples. Those haven’t been adjusted since 1997. Back then, the median home price was just over $144,000. Fast forward to 2025, and the median price is over 405,000.
Right, so what was originally designed as a tax on luxury homes is now hitting middle-class homeowners. If you bought a home 20 or 30 years ago and its value has appreciated significantly, you could be facing a hefty tax bill when you sell. That’s another reason people are staying put.
Exactly. And there’s been talk in Congress about increasing those exemptions or even eliminating the tax for primary residences, but so far, nothing’s been done. Until that changes, it’s just another factor keeping people from selling their homes.
So, between the high interest rates and the capital gains tax, it’s no wonder the market has been sluggish. But Yun doesn’t think this is a long-term issue. He’s optimistic that we’re on the brink of a recovery. And one of the reasons he’s so confident is that the current market conditions are very different from what we saw before the last big crash in 2008.
That’s an important distinction. Yun pointed out that only about 2% of home sales today are distressed property sales. Compare that to 2010, during the foreclosure crisis, when distressed properties made up a third of all transactions. The fundamentals of the market are much stronger now.
Absolutely. And that’s a key reason why he dismisses the idea of a looming housing crash. The conditions just aren’t there for a repeat of 2008. But, of course, no forecast is ever 100% certain. Even someone as experienced as Yun can’t predict the future with complete accuracy.
That’s true. And there are still a lot of variables at play. Interest rates, for one—they've come down since 2023, but they remain far higher than the rock-bottom rates of 2021. And then there’s the broader economy. If we hit a recession or see significant job losses, that could also impact the housing market.
Right, and we can’t forget about the role of government policy. If Congress does decide to adjust the capital gains tax exemptions, that could have a big impact on the market. It could encourage more people to sell, which would increase inventory and potentially bring prices down to more affordable levels.
So, there’s a lot to watch for as we head into 2026. But if Yun’s prediction holds true, we could be looking at a significant turnaround in the housing market. A 14% increase in home sales would be a welcome change after years of decline.
It definitely would. And it would have ripple effects beyond just the housing market. More home sales mean more activity in related industries—mortgages, home improvement, furniture, you name it. A recovery in the housing market could be a real boost for the economy as a whole. That's about all the time we have for this topic, but we go into even more detail on the site. For more, search "2026 home sales" at Mortgage research.com. We'll see you next time on the Mortgage Research Network Podcast.
