Cautious optimism is growing about this year’s outlook, but there are still plenty of variables
Is the tide slowly beginning to turn for the US housing and mortgage markets?
Rocket Companies chief executive officer Varun Krishna turned heads this week when he revealed that the lending giant is set to report its highest loan production volume in four years – and while national home sales aren’t exactly surging, glimmers of optimism are emerging of a better national market this year after a torrid 2025.
Some green shoots were already apparent in December, when the National Association of Realtors (NAR) revealed existing-home sales jumped by 5.1%.
The pace of home sales that month was its highest for almost three years, NAR’s chief economist Lawrence Yun said, and an improving year-over-year outlook has continued into 2026.
Just this week, mortgage applications slipped compared with seven days earlier – but were 117% higher than the same time last year, according to the Mortgage Bankers Association (MBA), in a further sign that a recent drop in rates could be helping hopeful homebuyers off the sidelines.
Brokers report cautious optimism – if rate trends continue
Mortgage brokers are cautiously optimistic about the outlook for the year ahead, even if plenty of buyers are still hesitant about moving ahead with a purchase.
“I feel that 2026 has gotten off to a better start than we’ve seen, and the pace is better than what we’ve seen in the past few months,” Melissa Cohn (pictured top), regional vice president at William Raveis Mortgage, told Mortgage Professional America. “But obviously, where interest rates go will have a lot to do with where the real estate market goes.”
Rates briefly plunged into the fives in January after President Trump announced a plan to have Fannie Mae and Freddie Mac purchase an extra $200 billion in mortgage bonds.
The average 30-year fixed mortgage rate has crept back up to 6.21%, the MBA said Wednesday, partly explaining the week-over-week dip in applications.
But the days of rapid rate growth, when buyers flocked to the sidelines in 2022 and 2023 amid a spike in borrowing costs, appear to be behind the market – and a calmer outlook, even without big rate declines, would be positive news for buyers this year, Cohn said.
“I think if rates remain stable, then hopefully we’ll see some improvement because a lot of people put off making a move last year,” Cohn said. “But hopefully inflation will stabilize and head back down towards the 2% level, the Fed will enact two additional rate cuts this year, we’ll see lower rates and we’ll have a better year.”
Analysts keep expectations for this year’s market in check
While hopes are high that the market will post a mild improvement over 2026, few are expecting activity to skyrocket this year.
Economic uncertainty and affordability challenges are continuing to keep a lid on homebuying, even if the market has swung in favor of buyers in recent months.
In its 2026 housing market forecast, J.P. Morgan said it expected average prices to remain unchanged this year, with sales set for a gradual – but slight – recovery.
It sees only a modest positive impact from two new housing policies introduced by the Trump administration: a ban on institutional investors purchasing single-family homes, and the multibillion-dollar purchase of mortgage-backed securities by Fannie and Freddie.
Some mortgage professionals are urging buyers to set more realistic expectations for what they can expect to afford from their starter home, viewing compromise as an essential part of being able to buy a property in many markets.
Cohen sees a slight improvement in the 2026 market as the best the mortgage industry can currently hope for.
“We’re not going to have a banner year,” she said. “Mortgage rates are not going down to 4%, but we can have a better year. Anyone who says that this is going to be a big banner year – unfortunately, I think they’re wrong.
“I think it’ll be a better year if rates remain stable and tilt towards the downside. But better is better than worse.”
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