2026 Forecast

While the Mortgage Bankers Association expects rates to average 6.4% and NAR expects them to fall to 6.0%, our 2026 forecasts are based on a middle scenario from Wells Fargo, who expect an average of 6.2%. Rates averaged 6.2% in Q4 of 2025, so we expect them average out to essentially flat in 2026.

Given this, we project a 3% year-over-year gain in sales. If rates are 6.4%, we anticipate slower sales growth (2%), and if rates fall to 6.0%, we forecast faster sales growth (4%).

A note about our 2025 forecast: Our forecast was 98% accurate, but some of the error was driven by underestimating interest rates. We expected an average 6.48% rate across the year. The actual average was 6.60%. The difference is even greater in quarters two and three, when real estate activity is highest. We expected 6.45% rates, but the actual rate averaged 6.68%. If we had projected 2025 knowing the actual interest rates, our forecast would have been 99% accurate. In other words, 36% of the error in our forecast came from the difference in the actual and expected interest rates. The other 64% is either random error that is part of forecasting or unexplained factors that we didn't include in our model.