"One of the reasons we expect mortgage rates to kind of hover in the 6.3% range and not move lower is because we do think inflation is going to tick up a little bit as tariff prices pass through to the overall price level, she said. So we think that's going to keep mortgage rates from falling too much in 2026. If that pass-through were even greater than we expected, we could potentially see mortgage rates rise even higher."
"She added that while higher-than-expected inflation or faster economic growth could push rates up, weaker growth could pull them down. If the economy were to slow more than we're expecting, which is possible, then we could see mortgage rates and other interest rates that are lower than what we're currently projecting, Hale said. I would say our expectation is that we're going to see modest growth, slowing growth, but growth nonetheless. So, there are scenarios where mortgage rates could end up lower than forecast."
"Home prices are projected to rise 2.2% in 2026, following a 2.0% increase in 2025. But those nominal gains are not expected to keep pace with inflation, meaning real home prices will fall for the second year in a row. The reason we're seeing real home prices decline is that home price growth is slightly below what I would consider a normal range, and inflation is higher than typical,"
The housing recovery is expected to be slow, with existing-home sales remaining well below normal and political and economic uncertainty keeping the outlook fragile. The average 30-year mortgage rate is expected to hover near 6.3% in 2026, slightly below the 2025 average of 6.6%. Inflation and tariff-related cost pressures are expected to prevent much lower rates, and larger tariff pass-throughs could push rates higher. Higher-than-expected inflation or faster growth could raise rates, while weaker growth could lower them. Steady income growth and rate relief could reduce mortgage payment share to 29.3%. Nominal home-price gains are projected but will likely lag inflation, producing a second consecutive year of falling real home prices.
Read at www.housingwire.com
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