Mid-Year Housing Market Update

I wanted to share a recap of the Mid-Year Housing Market update that I participated in with David Childers, President of KCM.  We discussed Mortgage Rates, Home Sales, Home Prices, and What is Motivating Buyers.

Key takeaways: % rates hit a low 5.9% before the Iran War and now are around 6.75%... and could potentially go higher. It really depends on if we can get resolution with the Iran War, which is causing volatility in oil prices, uncertainty with markets, inflation pressure, and consumer fear.

According to Danielle Hale (Chief Economist, Realtor.com), "For buyers and sellers hoping for favorable financing while making a move, a reduction in tension is likely to result in lower rates."

My guess is % rates will stay in the mid to high 6s for most of the year, until the Iran War is resolved.

Mortgage/ % Rates have been on the rise, and that has led NAR to trim home sales outlook for 2026. Even with a more modest pace of sales growth, homeprices continue to steadily increase due to minimal inventory growth. 

Cooling in home prices nationally (and in many Northwest neighborhoods) should offer some breathing room for prospective buyers currently sidelined by affordability challenges.

Pricing strategy is becoming critical for listingsthis spring ... homes that are priced competitively and presented well are still drawing strong interest this spring, including multiple offers, sometimes above asking price.

Despite the pull back in price appreciation, there are no isngs that we are headed for a major drop in home prices. In the current market, there are relatively few "forced sellers" who need to get out at any price.

Why people are buying right now - Despite Everything

Life doesn't stand still.  People get new jobs, grow their families, downsize after retirement, or simply want to live in a different neighborhood.  Those needs are starting to outweigh the financial benefit of clinging to a rock-bottom mortgage rate. As a result, more homes are hitting the market than we've seen in years, giving buyers a wider range of choices.

There is an emotional side to home ownership, particularly in the United States. It's often baked into people's vision of the future or part of the American dream. And it does feel good to own your own house. You can feel like it is a home and not just a temporary dwelling.

Affordability is a big issue now for many buyers entering the market.  Many homeowners are paying 42% of their income now towards their homes.  There are also increasing costs for insurance, maintenance, and homeowner dues that are causing affordability to worsen.

Kevin Warsh is the new Chairman of the Federal Reserve, having been sworn in on May 22, 2026, to succeed Jerome Powell. It will be interesting to see what he does this year to combat rising inflation, and pressure from the White House to cut % rates.