We are now five months into 2026—rapidly approaching the halfway point—and so far the year has thrown some definite curveballs at the real estate industry. This year was widely expected to be a year of stabilization and normalization for the housing market, and Q1 (January-March) is largely the stage-setter for how the rest of the year may shape up.
After several new headwinds have sprung up throughout Q1 (namely the conflict in the Middle East), those aforementioned expectations have seen some shifts.
Here are how some of the predictions for 2026 have evolved for several industry economists, who shared new outlooks after seeing how Q1 shaped up for the housing market:
Bright MLS: Slower first half of 2026, but brighter end to the year
In Bright MLS’s original 2026 forecast back in December, Chief Economist Lisa Sturtevant outlined some positivity for the year ahead, feeling that a potential combination of better affordability and more inventory would “bring buyers out, leading to a rebounding 2026 housing market.”
Sturtevant predicted existing-home sales growth of 9% by the end of the year (from 4.137 million to 4.510 million). She also predicted mortgage rates reaching 6.15% within a year (rates were around 6.25% at the time), but noted that a rise in inflation or federal deficits, or an “unexpected international conflict” would stall this fall—as the conflict in the Middle East currently has.
So far the opposite has materialized—with sales falling and now flattening to 4.02 million and mortgage rates rising—but Sturtevant feels this is not the end to optimism.
Looking at how Q1 has shaped up, Sturtevant now tells RISMedia that home sales will be “slower” during the remainder of the first half of 2026, but are “projected to pick up in the second half of the year, particularly in the fourth quarter, when mortgage rates will fall into the low 6% range.”
One of the predictions that has held so far is that home-price growth would stall, a trend that has been observed over the past couple of months across several industry reports. Sturtevant says price growth will continue to be “flat” throughout the year. She was also hopeful of increases in inventory, which appears to be materializing in the market as of late.
Additionally, Sturtevant sees the regional divergence observed in home sales continuing “through much of 2026.” Particularly, as inventory continues to grow in the South and the West, the two regions will see further price declines, as they have recently.
Cotality: “Constrained” view as the economy awaits relief
Cotality Chief Economist Selma Hepp says that at the end of 2025, her outlook was “built around the expectation that easing inflation and lower rates would gradually restore affordability and unlock sidelined demand,” as many others thought at the time.
However, now that we’ve reached the end of Q1, her view has “shifted meaningfully as geopolitical risk intensified, bond yields reset higher, and mortgage rates followed suit.”
“Inflation has picked back up, forcing a reassessment of how quickly financial conditions can realistically ease,” Hepp adds. “At the same time, expansionary fiscal policy and global uncertainty have added upward pressure on long‑term yields, limiting the housing market’s ability to benefit from even modest improvements in growth.”
The result of these changes to the landscape of the U.S. and the world at large have led Hepp to a change in outlook that is “more constrained, more rate‑sensitive, and far more dependent on income growth than on policy relief.”
Realtor.com: “Major indicators have held up so far”
In the portal’s 2026 predictions back in December, Realtor.com® outlined what Senior Economist Jake Krimmel described as “not overly pessimistic,” but “not overly rosy.” At the time, Chief Economist Danielle Hale gave a conservative assessment, dubbing this year to be a “turning point.”
For 2026, Hale predicted a modest 1.7% increase in sales and mortgage rates remaining roughly flat at around 6.3%, setting up a more “balanced” market while not necessarily expecting a “snapback” to previous norms.
Speaking to RISMedia now, Krimmel notes that Realtor.com’s earlier predictions anticipated at least some disruption.
“We also flagged that the macro outlook would stay foggy and that 2026 would probably throw some curveballs our way, if for no other reason than because 2025 taught us that much,” adds Krimmel.
He notes that what he and Hale weren’t predicting was the “nature of the headwinds facing the housing market right now,” referring to the spike in gas and energy prices due to the conflict in the Middle East.
Despite this “curveball,” Krimmel says that as of right now, Realtor.com would not “substantially alter our outlook at headline view or numbers,” but are “widening our proverbial confidence intervals” post-Q1.
“Conditions initially looked positive but then turned volatile. Still, major indicators have held up so far,” he continues. “New listings hit their highest April level since 2022, pending sales were up year-over-year for the fourth straight month and price cuts fell rather than spiked. None of these are warning signs that would signal a second consecutive ‘failure to launch’ housing market.”
However, Krimmel notes that the housing market is resilient, but not entirely resistant to shocks, and the path ahead is slightly unclear as “we don’t yet know how fragile things are, and whether the same headwinds that haven’t broken the market yet could still slow it down once we hit peak selling season.”
“If there’s one reason for cautious optimism here it’s that economic uncertainty has become a feature, not a bug, of the modern economic environment,” he concludes. “Buyers and sellers have adapted to operating under a cloud of macro volatility in ways they hadn’t in spring 2025, when the tariff shock caught everyone off guard.”
NAR: The timeline to relief has been delayed
In a brighter outlook for the year, the National Association of Realtors®’ (NAR) predictions for 2026 back in December painted a hopeful picture for a 14% increase in existing-home sales, a 4% growth in home prices and a fall in mortgage rates toward the 6% line—much more optimistic than most other housing economists.
Now, NAR Chief Economist Lawrence Yun says that while NAR’s “broader market outlook has not materially changed,” his expectations around timing and “near-term affordability pressures have evolved somewhat.”
Yun says that “at a high level” the market is still “being driven by the same core dynamic we discussed late last year,” meaning historically low home sales coupled with still rising home prices due to “constrained” inventory.
“In my view, the lack of supply continues to prevent meaningful price declines, even as affordability challenges weigh on buyers,” he continues.
Due to the nature of spikes in mortgage rates—as well as oil, gas and energy prices—from the Middle Eastern conflict, Yun says the expected spring boom has been “delayed,” and affordability pressures have been “reinforced.”
“That said, I still view demand as fundamentally pent-up rather than absent, and I think the buying season may simply shift later into the summer or fall if rates begin to ease,” he continues.
Overall, Yun expressed what other economists have been preaching: cautious optimism.
“While near-term conditions have become somewhat more challenging because of rates, I still expect home sales activity to improve this year versus last year if mortgage rates moderate,” he concludes.
