NAR economist downgrades sales forecast, eyes rebound in 2026 

While the housing market has been slower than he expected, NAR's chief economist is still forecasting higher home sales in 2025 — despite his downward revision this week — and a big jump the following year if mortgage rates come down.

Those predictions and more were discussed during the National Association of Realtors' Forecast Summit on July 16, which also looked at first-time buyers and U.S. migration trends.

Resetting expectations (again)

Lawrence Yun said he now expects home sales to increase by 3% this year compared to 2024. That figure has been steadily falling: In March, Yun predicted 2025 sales would be up by 6%; he was even more bullish last November, forecasting 9% growth this year.

The culprit? Mortgage rates that remained near 7% during the spring selling season, dampening buyer demand.

"So far, it's been a bummer," Yun said.

But if 30-year mortgage rates drop to around 6% by the end of the year, Yun believes that could drive 14% more home sales in 2026.

"The assumption is we're not going to face a recession despite all this discussion of tariffs," Yun said, noting that the stock market is hovering around all-time highs, which could lead to business community investment.

Lower rates will be key to future sales

During NAR's midyear legislative meetings in June, Yun called mortgage rates the "magic bullet" to spur buyer demand. 

He backed that up during his presentation this week using data from NAR's Market Statistics Dashboard, a new resource for Realtors unveiled on July 15, that estimated home sales across the U.S. would increase by around 550,000 in 12-18 months if mortgage rates dropped to 6% — and stayed there. 

That figure is based on the number of households that can afford to buy at different mortgage rate levels, and the share that would then translate to home sales. The data is also broken down by metro area so agents can show clients what's happening in their market, including sales and listing trends, home pricing changes and demographic insights.

Aside from slow home sales, Yun said the housing market is fairly stable — equity is high, mortgage delinquency rates are low and a significant number of households own their home outright — "showing that real estate is on very solid ground."

First-time buyer challenges and opportunities

Also presenting at the Forecast Summit was NAR Deputy Chief Economist Jessica Lautz, who noted that first-time buyers account for just 24% of home sales — an all-time low — due to affordability challenges.

That also makes it tough for agents to close a deal, but they can improve the odds by encouraging first-time buyer clients to buy in the off-season, Lautz said, pointing to research that shows first-timers have more success in the winter.

"They have a little more to work with when they think about the competition in the market, and their offer may actually be seen — in comparison to a family who's actually able to compete, perhaps with housing equity," Lautz said.

Domestic migration still favors the South

While the South and Sun Belt regions remain top mover destinations, the West and Midwest are seeing higher year-over-year growth in domestic migration rates.

NAR Economist Anat Nusinovich characterized it as a moderate shift in momentum, with some noteworthy year-over-year increases in Utah, Washington state and Nevada. Texas continues to attract the most movers, though at a slower rate in recent years.

Movers head to the South because the labor market is strong and home prices are generally more affordable, Nusinovich said, noting that loan applications are up in the region — "evidence that Americans are moving to these areas with the intention to buy homes."