Driven by recovering demand and stabilizing mortgage rates, the housing sales value is expected to experience a significant surge in Fiscal Year 2026 (FY26). A new report forecasts a near 20% increase in housing sales value, signaling a robust period for the real estate market. This projection reflects increasing optimism among economists and housing market analysts, who anticipate improved affordability and a resurgence in home sales activity.
Several factors contribute to this positive outlook. Mortgage rates, which have been a significant constraint on affordability, are expected to decline steadily. Fannie Mae's Economic and Strategic Research Group anticipates mortgage rates to settle at 6.4% by the end of 2025 and further decrease to 5.9% by the close of 2026. This reduction in borrowing costs will likely encourage more potential buyers to enter the market, boosting sales volume.
Existing home sales have already demonstrated signs of recovery, with year-over-year growth recorded in recent months. In August, new single-family home sales surged 20.5% month-over-month, reaching their highest level in over three and a half years. This momentum is expected to continue into FY26, with forecasters predicting nearly a 10% jump in total home sales compared to the end of 2025. Fannie Mae specifically forecasts an annualized existing home sales rate of 4.446 million by the end of 2026, considerably higher than the 2025 forecast of around 4 million.
rising incomes are also expected to play a role in improving housing affordability. As wages increase, potential homebuyers will have more purchasing power, enabling them to qualify for mortgages and invest in property. The combination of lower mortgage rates and rising incomes is poised to create a more favorable environment for homeownership.
While the overall outlook is positive, some regional variations are expected. Some markets may experience faster price growth due to limited inventory, while others might see slower appreciation or even price declines. Zillow’s economists project that U.S. home prices will increase by 1.9% between September 2025 and September 2026.
Moreover, a potential shift towards a buyer's market by mid-2026 to 2027 could influence market dynamics. As inventory increases and demand potentially softens, buyers may gain more negotiating power. Additionally, a sharp decrease in multifamily completions by 2026 could affect rental markets and potentially influence single-family home demand.
Despite these nuances, the projected surge in housing sales value for FY26 indicates a positive trajectory for the real estate sector. The anticipated decline in mortgage rates, coupled with rising incomes and increasing home sales, suggests a market poised for growth. While challenges related to affordability and inventory may persist in certain areas, the overall forecast points towards a strong year for the housing market.
