1️⃣ The “5.8% Forecast”: Breaking the Psychological Barrier
For a long time, the 6% mark has been a major psychological hurdle for buyers. Thanks to the government-sponsored enterprises (GSEs) stepping in to purchase $200 billion in MBS, we are seeing a direct downward pressure on rates.
- The New Reality: While we previously expected rates to average 6.1%, the new forecast for 2026 is now 5.8%.
- Immediate Impact: Mortgage News Daily already recorded a 30-year rate of 5.99% last week.
- Monthly Savings: A 0.33% reduction in rates translates to approximately $60 in monthly savings on a typical new mortgage. Over time, this significantly increases your total purchasing power.
2️⃣ More Houses on the Market, More Buyers in the Game
The “Rate-Lock Effect”—where sellers stay put because they don’t want to give up their low pandemic-era rates—is finally beginning to ease.
- Increased Listings: As market rates fall closer to sellers’ original locked-in rates, more homeowners are feeling comfortable listing their homes and moving.
- Surge in Demand: Lower rates are bringing buyers back. We expect existing home sales to grow by 6.4% this year, a significant jump from our previous 3.9% baseline.
- The Outlook: While supply is increasing, demand is rising even faster, meaning the market will remain competitive and active.
3️⃣ Understanding the 7.8% Price Increase
You may see headlines stating that sales prices are rising by 7.8%. However, it’s important to look at the “why”:
- Market Mix: This increase is largely driven by a higher volume of transactions in higher-valued regions.
- Home Values: Actual home value appreciation remains steady and sustainable at around 1-2%. This is good news—it means the market is getting more active without entering a “bubble” phase.