Published August 19, 2026

If you’ve spent the last couple of years waiting for the housing market to finally get back to “normal,” you may be wondering what exactly normal is supposed to look like anymore.

Mortgage rates are still high.

Home prices are still expensive.

A lot of homeowners still don’t want to sell.

And buyers who thought waiting a few months would magically fix affordability are still waiting.

Now a new housing forecast is adding another uncomfortable possibility: this sluggish market may stick around longer than many people expected.

Quick Answer

Capital Economics is forecasting that U.S. home sales could slow to around 4.7 million by the end of 2026, which the firm says would be the slowest pace since 2011. It also expects 30-year mortgage rates to remain above 6% for at least the next couple of years and national home-price growth to be roughly flat in 2026. The forecast was reported by Business Insider this week.

That is a forecast, not a guarantee.

But the current housing data does show a market struggling to gain momentum.

Freddie Mac reported that the average 30-year fixed mortgage rate was 6.67% as of August 13. Existing-home sales declined 1.7% in July, while pending home sales dropped another 2.3%. New residential construction also took a sharp step backward in July.

So no, the housing market has not fallen apart.

It just seems to be having a very hard time going anywhere.

Mortgage Rates Are Still Doing Most of the Damage

For buyers, this starts with the mortgage payment.

The average 30-year fixed mortgage rate was 6.67% last week, according to Freddie Mac. A year earlier it was 6.58%.

That may not sound like a dramatic difference.

But mortgage rates don’t need to move dramatically to change what a house feels like in your monthly budget.

Take a $400,000 mortgage.

At 6.67%, principal and interest would be roughly $2,573 per month.

At 6%, it would be about $2,398.

That’s roughly $175 a month before property taxes, homeowners insurance, mortgage insurance or HOA dues are even added.

That is why buyers obsess over the idea of rates getting back near 6%.

And it is also why the latest Capital Economics forecast is getting attention. The firm reportedly expects the 30-year fixed rate to finish 2026 around 6.5% and remain above 6% through at least 2028.

None of that is certain.

Mortgage rates can change quickly as inflation expectations, Treasury yields, economic data and financial markets move.

We recently explained why mortgage rates haven’t fallen more and what the 10-year Treasury has to do with it.

The important part for buyers is this: building an entire homebuying plan around the assumption that substantially lower rates are just around the corner is still a gamble.

Home Sales Are Moving in the Wrong Direction Again

The latest sales numbers aren’t exactly screaming “housing boom.”

Existing-home sales decreased 1.7% in July, according to the National Association of Realtors. The median existing-home sales price was $431,400, and inventory represented about 4.6 months of supply at the current sales pace.

There is some nuance here.

NAR says year-to-date existing-home sales were still up 2.4%, so the market has not simply collapsed compared with 2025.

But the forward-looking numbers weakened too.

Pending home sales — signed contracts that generally turn into completed sales later — declined 2.3% in July and were 2.2% lower than a year earlier. All four major U.S. regions posted monthly declines.

In other words, buyers didn’t exactly rush back into the market this summer.

And Builders Just Hit the Brakes

This part matters more than it may seem.

If existing homeowners aren’t selling, new construction can provide badly needed inventory.

But builders pulled back sharply in July.

The U.S. Census Bureau reported that total housing starts fell 12.4% from June, to a seasonally adjusted annual rate of 1.239 million units.

Single-family housing starts dropped to 808,000, down 9.9% from June.

That doesn’t automatically mean there will be a housing shortage tomorrow. In fact, single-family building permits increased 2.5% in July, which is at least one more encouraging signal for future construction.

But fewer homes being started today can eventually mean fewer completed homes available to buyers later.

And that creates one of the strangest parts of the current housing market.

High mortgage rates are hurting demand.

But they can also discourage homeowners from selling and builders from building.

So prices don’t necessarily fall as much as frustrated buyers expect.

What About Home Prices?

This is where people hear “slowest market since 2011” and immediately start thinking:

Housing crash.

That is not what the forecast is saying.

Capital Economics reportedly expects national home prices to be roughly flat in 2026, followed by increases of about 2.5% in 2027 and 4% in 2028.

Flat prices would certainly be a major change from years of rapid appreciation.

But flat is not the same thing as collapsing.

Current NAR data also shows just how expensive the national market remains, with the July median existing-home price at $431,400.

And national numbers can hide enormous differences.

A buyer in one city may be seeing price reductions, longer listing times and sellers willing to negotiate.

Someone two states away may still be competing for a limited number of desirable homes.

NAR specifically notes that local housing conditions vary considerably.

That is why a national housing forecast should be treated as context — not as a prediction of what your neighborhood will do.

There May Actually Be Some Good News for Buyers

A slow housing market is frustrating.

But it isn’t necessarily bad for every buyer.

NAR says homes are spending longer on the market and fewer buyers are bidding above asking price than they were a year ago.

That can matter.

A buyer who was constantly getting blown out of bidding wars a few years ago may now have more time to inspect the property, compare financing and negotiate the terms of an offer.

Not everywhere.

Not on every house.

But the market does not have to “crash” for negotiating conditions to improve.

The frustrating part is that the financing side of the equation is still expensive.

Waiting for the Perfect Market Can Become Its Own Problem

There is a perfectly reasonable reason to wait to buy a house:

The numbers don’t work for you.

If the payment would stretch your budget, your emergency savings would disappear, or you simply aren’t ready for the costs of homeownership, waiting can make complete sense.

But that is different from waiting because someone promised mortgage rates will definitely be 5% next spring or home prices will definitely drop 20%.

Nobody knows that.

Instead, start with the numbers you can actually see today.

Our mortgage calculators let you test different home prices, rates, down payments and monthly-payment scenarios.

And remember that lender approval and personal affordability are not the same thing. Our guide on how much house you can really afford — not just what a lender approves explains why that distinction matters.

If You’re Trying to Decide Whether to Buy Now

Forget the national predictions for a minute.

Ask a few much more useful questions.

Can you comfortably handle the payment at today’s rate?

Do you expect to stay in the home long enough for buying to make sense?

How much cash will you have left after the down payment and closing costs?

What does inventory look like where you actually want to live?

And are sellers negotiating in your local market?

If you’re genuinely torn between continuing to rent and buying, the Loan Under Review Rent vs. Buy Calculator lets you test both scenarios using your own assumptions instead of somebody else’s housing forecast.

If you’re already shopping lenders, compare the actual offers too. The Loan Estimate Comparison Tool can help you look beyond the advertised rate and compare payment, points, lender costs, APR and cash to close.

What Buyers Should Watch From Here

The housing market doesn’t need one miracle number.

It needs several things to start cooperating at the same time.

Meaningfully lower mortgage rates would improve purchasing power.

More existing homeowners putting their houses on the market would improve selection.

More new construction would help supply.

And slower price growth would give incomes a chance to catch up.

Some of those things may happen.

They simply haven’t happened enough yet.

For buyers, that makes 2026 less about trying to predict the exact moment the housing market finally “fixes itself” and more about knowing what price and payment actually work for you.

If the numbers work and you find the right property, a gloomy national forecast does not automatically make buying a bad decision.

If the numbers don’t work, a fear of missing out does not make them work either.

That decision belongs to your budget — not the housing headlines.

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Sources

• Freddie Mac — Primary Mortgage Market Survey, August 13, 2026.
• National Association of Realtors — July 2026 Existing-Home Sales.
• National Association of Realtors — July 2026 Pending Home Sales.
• U.S. Census Bureau and HUD — July 2026 New Residential Construction.
• Business Insider — reporting on Capital Economics’ latest U.S. housing-market outlook.

Educational information only: Loan Under Review provides independent mortgage education and housing-market news. Loan Under Review is not a lender and does not provide financial, legal, investment, tax or real-estate advice. Mortgage rates, home prices, loan terms and market conditions can change and vary by borrower and location.