Keys to the housing market for the rest of 2026

As we gear up for the second half of 2026, what are the key things we should be watching for? With the first six months being a dramatic version of the show 24, we can hope for a calmer second half of 2026 now that the conflict with Iran is hopefully ending. 

Housing has outperformed some people’s expectations this year, as rising mortgage rates haven’t had the negative impact they did in previous years, mostly due to better mortgage spreads and slightly better affordability as wages outpace home prices. Let’s focus on what to look for in the second half of 2026.

Weekly pending sales

Our pending home sales data provides a week-to-week perspective, though results can be affected by holidays and short-term fluctuations. Our weekly pending sales data typically takes 30-60 days to be reflected in the sales data. 

For the second half of the year, I will be looking to see if we can get positive year-over-year growth in pending sales regardless of where mortgage rates go. In the past, rates above 6.64% — which typically took us over 7% — have led to sales slowing down. Housing has held up well, mostly because we haven’t broken above 7% rates this year.

My forecast for 2026 was 237,000 more existing home sales than 2025 if rates can just stay under 6.25%. This is what I will be tracking the rest of this year given that mortgage rates started to fall toward the end of 2025, and we had a nine-month high in existing home sales in December. So, the year-over-year comps for the existing home sales report will be harder to grow starting in July. 

Here are the pending sales for last week over the last two years:

• 2026: 75,489
• 2025: 70,352

Mortgage purchase application data

Purchase application data is a forward-looking indicator: growth here leads home sales by roughly 30-90 days. Last week we saw a decline of 3% week to week, but the data was still positive year over year by 5%. We should still have positive growth this year as mortgage rates aren’t above 7%. But, with rates near yearly highs, I want to see if we can hit my growth forecast, even with elevated rates from where we were earlier in the year. In 2025, we saw better monthly existing home sales reports in the fall and winter due to lower rates.

Here are the stats on purchase apps so far in 2026:

• 10 positive week-to-week prints
• 11 negative week-to-week prints
• 2 flat week-to-week prints
• 10 weeks of double-digit year-over-year growth
• 21 weeks of positive year-over-year growth
• 2 negative year-over-year prints

Housing inventory

In 2025, housing inventory growth was really good, with inventory growing 33% year over year at one point. Then we hit mid-June 2025 and I noted that the housing market was about to shift, which it did. Not only has inventory growth been slower in 2026 year over year, three out of the last four weeks were negative year over year, and this week inventory only grew 0.247%.

For the rest of 2026, it won’t be hard for the year-over-year comps to show growth, so my focus will be on how the inventory data looks with rates at these levels. Right now it looks like a flattish trend — between down 2%, flat or up 2%. So, the key will be what inventory does now when rates are below 6.75%. 

• Weekly inventory change: (June 12-June 19): Inventory rose from 816,924 to 830,939
• Same week last year: (June 13-June 20): Inventory rose from 825,718 to 828,890

New listings

Seasonality in the new listings data is here; we are starting the traditional decline and it’s been another year of not getting back to normal. Traditionally, we would see 80,000-100,000 new listings during the seasonal peak weeks, but we’ve only cracked above 80,000 four times this year and never in back-to-back weeks, as I was hoping. 

Some context for those who believe that the new listings data resembles the housing bubble years: new listings during that time ranged from 250,000 to 400,000 per week for several years. Several years!

For the rest of the year, keep an eye out for any kind of deviation from the data year over year. As we get closer to the end of the year, new listings data starts to fade even more, but we always want to keep an eye on how it behaves in the summer. By fall and once we are in winter, not so much.

Here is last week’s new listings data for the past two years:

• 2026: 76,573
• 2025: 76,179

Price-cut percentage

Typically, about one-third of homes undergo price reductions before they sell, reflecting the dynamic nature of the housing market. For the most part, price-cut percentages this year have been lower than last year.

In my 2026 home-price forecast, I had a negative 0.62% call for the year nationally. Mortgage rates fell more than I anticipated early in the year. Home-price growth really isn’t going anywhere this year, but the percentage of price cuts has been lower year over year for most of 2026. If rates fall, demand picks up and and inventory once again goes negative year over year, my forecast will have a hard time being correct.

Right now, demand is too good to grow the price-cut percentage versus last year. If mortgage rates get above 7%, that might be a different story. For the second half of 2026, I am going to focus on what happens if mortgage rates just stay above 6.50%. All the data in 2026 was based on lower rates than last year. If mortgage rates stay above 6.50%, we will eventually be working with data showing higher rates this year than last, as rates were falling toward the end of the year. I want to see if that changes the data any. Housing has performed well in 2026 because, for the most part, we have remained below 6.64% for the entire year. I don’t believe the data should change much, but I will keep an eye on it.

The price-cut percentage for last week:

• 2026: 38.62%
• 2025: 40%

10-year yield and mortgage rates

In the 2026 HousingWire forecast, I anticipated the following ranges:

• Mortgage rates between 5.75% and 6.75%
• The 10-year yield fluctuating between 3.80% and 4.60%

Last week was crazy: we had the deal with Iran and it was Fed week. I talked about this on two episodes of the HousingWire Daily podcast — one about new Fed Chair Kevin Warsh in general, and the second about whether Trump and Warsh, working together, can get lower mortgage rates in this environment. 

The conflict is ending but inflation is still too hot and labor has improved, so I wrote about where I believe the 10–year yield should be trading based on the economic data, which is between 4.46%-4.48%. We closed Friday at 4.46%, and now that the Fed meeting is done and hopefully the Iran conflict is over with, we can focus again on economic data to see where the 10-year yield and mortgage rates can go.

Mortgage spreads

Mortgage spreads have been a positive story for the past few years. I don’t expect too much drama around mortgage spreads in the second half of 2026, unless the Fed really wants to go super hawkish with the conflict ending. The chart below is the No. 1 reason housing data has held up in 2026. 

Historically, mortgage spreads have ranged from 1.60% to 1.80%. Last week, spreads closed at 2.0%, up from 1.99% the week before.

Let’s compare last week’s mortgage rates to where they would have been over the last three years, given the 10-year yield’s current level:

• If we had the worst mortgage spread levels of 2023, mortgage rates would be 7.69% today, not 6.58%.
• If we had the worst levels of 2024, mortgage rates would be 7.31% today 
• If we had the worst levels of 2025, mortgage rates would be 7.11% today.

The week ahead: Iran, inflation and Fed speeches

We have had some crazy weekend headlines about Iran, so we will see how the market trades Sunday night. This week, we will have some Fed speeches and it will be interesting to see how Fed governors talk now, with oil prices down so much from the peak. We also have PCE inflation data that the markets will work from, too.

This will be the first clean week to work off that 4.46% level on the 10-year yield, so the the second half hunt for lower mortgage rates begins.