Housing Market Predictions for 2025 and 2026 by NAR: What International Investors Need to Know

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For international real estate investors, knowing what’s ahead for the U.S. housing market is crucial. Future trends directly affect how much your properties might grow in value. They also impact how steady your consistent cash flow rentals will be. The National Association of Realtors (NAR) offers important forecasts. These can help you plan your U.S. property investment wisely.

This article shares NAR’s predictions for the U.S. housing market in 2025 and 2026. We will look at what they expect for home sales, prices, and mortgage rates. Most importantly, we will explain what these predictions mean for you, the real estate investor, aiming for long-term price appreciation and reliable rental income.

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Key Takeaways: NAR’s Forecasts & Investor Strategy

• Positive Outlook: NAR predicts a stronger housing market in 2025 and 2026. This includes more home sales and rising prices.

• Mortgage Rates Easing: Mortgage rates are expected to slowly drop. This will make homes more affordable.

• Increased Sales: Both existing and new home sales are set to grow. This means more activity in the market.

• Steady Price Growth: Home prices are expected to keep going up. This is good news for long-term price appreciation.

• Benefits for Investors: These trends can lead to more renters. This helps ensure consistent cash flow rentals. It also supports property value growth.

Related: The Best Places to Invest in U.S. Real Estate in 2025; States, Cities and Neighbourhoods

NAR’s Key Predictions for 2025 and 2026

The National Association of Realtors (NAR) is a leading voice in U.S. real estate. Their Chief Economist, Lawrence Yun, provides important insights. His forecasts help investors understand where the market is headed.

Here are NAR’s main predictions for the U.S. housing market:

U.S. Housing Market Forecasts by NAR

Source: NAR

What these numbers mean:

• More Home Sales: NAR expects more homes to be bought and sold. This shows a healthier, more active market.

• Rising Prices: Home values are predicted to continue growing. This means your property could be worth more over time.

• Lower Mortgage Rates: The average mortgage rate is expected to slowly go down. This makes buying a home more affordable for many.

Related: U.S. Real Estate Markets Forecast and Expert Predictions for the Next 5 Years

What Drives These Forecasts?

Several big factors shape NAR’s predictions. Understanding these helps international investors see the bigger picture.

The Federal Reserve and Inflation

The Federal Reserve (the Fed) plays a big role. It sets interest rates that affect the whole economy. While the Fed doesn’t directly control mortgage rates, its actions influence them. If inflation (prices going up too fast) cools down, the Fed might cut its rates. This could lead to lower mortgage rates.

NAR’s Lawrence Yun believes lower mortgage rates are like a “magic bullet” for the market. They can bring more buyers back. He notes that the Fed is being careful. They want to make sure inflation is fully under control before cutting rates more quickly.

Strong Job Market and Wages

A healthy job market is also key. When more people have jobs, and wages are rising, they can afford housing. This creates demand for both buying and renting. NAR’s forecasts include continued job growth. This supports the idea of a stronger housing market. Rising wages also help people afford homes, even if prices are still going up.

Housing Inventory

The number of homes for sale (inventory) also matters. When there are few homes, prices tend to stay high. If more homes come on the market, it can ease price pressure. NAR expects inventory to slowly improve. This will give buyers more choices. It also helps the market move more freely.

Related: U.S. Mortgage rate Forecast and Expert Predictions 2026, 2027 and 2028

What This Means for International Rental Property Investors

These predictions from NAR are very good news for international real estate investors. They point to a market that supports both long-term price appreciation and consistent cash flow rentals.

Potential for Long-Term Price Appreciation

When home prices are expected to rise steadily, it’s good for your investment.

• Growing Equity: Your property’s value could increase over time. This builds your equity.

• Stable Growth: NAR’s forecast suggests steady, not wild, price increases. This kind of growth is healthier and more sustainable. It reduces the risk of sudden price drops. This helps protect your long-term wealth.

Supporting Consistent Cash Flow Rentals

A healthier housing market also benefits your rental properties directly.

• More Renters: As homes become more affordable, some renters might buy. But the overall market activity means a continued need for rentals. Also, some people might still choose to rent for flexibility.

• Steady Occupancy: A strong job market and overall demand help keep your rental properties full. This means fewer empty periods.

• Reliable Income: High occupancy leads to steady rental income. This is crucial for consistent cash flow rentals. It helps you cover costs and build profit.

Lower mortgage rates also mean that if you buy new properties, your loan payments might be lower. This can boost your cash flow from the start.

Strategic Opportunities

For international investors, these forecasts offer clear chances:

• Smart Buying: Consider buying properties in areas with good job growth and strong rental demand.

• Refinancing: If rates drop, you might be able to refinance existing loans. This could lower your monthly payments and improve cash flow.

• Long-Term View: These predictions support a long-term investment strategy. The benefits of appreciation and cash flow grow over many years.

Related: How Much Have U.S. House Prices Gone up in 30 Years

Conclusion: Planning for Growth in the U.S. Housing Market

NAR’s predictions for 2025 and 2026 paint a hopeful picture for the U.S. housing market. They suggest a period of growing sales, rising prices, and slowly falling mortgage rates. For international real estate investors, this is great news. It means good chances for long-term price appreciation and consistent cash flow rentals.

By understanding these forecasts and planning carefully, you can make smart U.S. property investment decisions. This will help you achieve your financial goals and build long-term wealth.

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Frequently Asked Questions (FAQs) About NAR’s Housing Market Predictions

• Q1: What are NAR’s main predictions for U.S. home sales in 2025 and 2026? A1: NAR forecasts that existing home sales will increase by 6% in 2025 and 11% in 2026. New home sales are expected to rise by 10% in 2025 and 5% in 2026.

• Q2: What is NAR’s forecast for median home prices in 2025 and 2026? A2: NAR predicts that the median home price will increase by 3% in 2025 and 4% in 2026. This indicates steady long-term price appreciation.

• Q3: How are mortgage rates expected to change according to NAR? A3: NAR forecasts that the average mortgage rate will be around 6.4% in the second half of 2025. It is expected to drop further to an average of 6.1% in 2026.

• Q4: How do these predictions benefit international real estate investors looking for rental properties? A4: The forecasts suggest a stable market with growing demand. This can lead to higher occupancy rates and more consistent cash flow rentals. Rising home prices also support long-term price appreciation for your investments.

• Q5: What factors does NAR say are driving these market predictions? A5: NAR highlights the Federal Reserve’s actions on interest rates, inflation trends, the strength of the U.S. job market, and changes in housing inventory as key drivers of their forecasts.