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NAR’s Latest US Housing Market Predictions 2025-2026: A Guide for International Investors

For international investors with an interest in the U.S. real estate market, staying on top of what the expert are saying is usually a pretty god idea. The National Association of Realtors (NAR) recently released its latest housing market predictions for 2025 and 2026, offering some insight for those seeking stable and profitable U.S. property investment opportunities.

This in-depth guide will dissect NAR’s projections, providing global property investors with a clear understanding of anticipated trends in home prices, sales volume, and mortgage rates. I’ll also integrate some insights from other housing market ‘experts’ to offer a more comprehensive outlook, highlighting the critical factors that will shape investment strategies for those focused on consistent cash flow and long-term growth in the dynamic American market.

The National Association of Realtors (NAR) Forecast for 2025-2026

The National Association of Realtors (NAR) provides a widely respected outlook on the U.S. housing market. Their latest predictions paint a picture of a market gradually stabilizing and recovering after a challenging period, driven by modest price growth and an anticipated rebound in sales.

Key Predictions from NAR Chief Economist Lawrence Yun:

Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently shared an optimistic outlook, suggesting “brighter days may be on the horizon” for the U.S. housing market. Speaking at the NAR 2025 REALTORS Legislative Meetings, Yun provided the following key forecasts:

• Existing Home Sales: Expected to rise 6% in 2025 and accelerate by 11% in 2026. This signals a significant recovery in transaction volume after two challenging years.
• New Home Sales: Projected to climb by 10% in 2025 and an additional 5% in 2026. This growth in new construction is crucial for addressing the persistent housing supply deficit.
• Median Home Prices: Forecasted to continue increasing modestly, with a projected rise of 3% in 2025 and 4% in 2026. This indicates a return to more sustainable appreciation rates after the rapid surges seen earlier in the decade.
• Mortgage Rates: Anticipated to average 6.4% in the second half of 2025 and dip further to 6.1% in 2026. Yun referred to mortgage rates as a “magic bullet” for the market, emphasizing their impact on buyer affordability and demand.

Yun acknowledged the market has been “very difficult,” noting, “The fast ascent of mortgage rates has really hurt the real estate market.” However, he also highlighted encouraging signs such as moderating inflation (with shelter costs trending downward) and strong wage growth outpacing the consumer price index. He expressed optimism, stating, “There’s a light at the end of the tunnel based on recent rises in mortgage applications to buy a home.” (Source: National Mortgage Professional, June 11, 2025 and NAR.realtor, June 3, 2025)

Implications for International Investors:

NAR’s forecast suggests a return to a more predictable and fundamentally driven housing market. For international investors, this means:

• Stable Appreciation: Moderate home price growth offers more sustainable long-term returns rather than speculative gains.
• Increased Inventory: As sales volume rebounds, more inventory should become available, offering international investors a broader selection of properties.
• Improved Affordability (Relative to Peak): While rates aren’t returning to historic lows, any decline makes homeownership slightly more accessible, which can stimulate demand.

Related: How to Structure Your U.S. Property Investment

A Broader Consensus: Other Leading Expert Forecasts

While NAR provides a crucial perspective, integrating forecasts from other pundits and market participants offers a more comprehensive picture for global property investors.

• Fannie Mae: In its revised May 2025 forecast, Fannie Mae anticipates mortgage rates to drop to 6.1% by the end of 2025 and 5.8% by the end of 2026. They also project an upward revision for total home sales to 4.92 million units in 2025, signalling a building momentum in the market. (Source: Scotsman Guide, May 21, 2025)
• Mortgage Bankers Association (MBA): The MBA, while slightly more conservative on immediate rate declines, recently revised its 2025 mortgage rate forecasts upward, projecting rates to remain in the mid-6% range (6.4%-6.6%) in 2025, holding steady around 6.3% into 2026. This adjustment reflects ongoing inflation risks. (Source: CRE Daily, May 30, 2025)
• Selma Hepp, Chief Economist for CoreLogic: Hepp expects further price deceleration in 2025, but emphasizes the regional variations. She states: “While home prices are rising nationally, this may not be true everywhere. Some markets are actually seeing stronger price growth, while others are slowing or even seeing home prices decline.” She also notes that mortgage rates are “unlikely to move outside the narrow range of 6.5% to 7% unless there’s an economic downturn or a spike in joblessness.” (Source: Cotality, March 30, 2025 and Century 21 Affiliated, March 26, 2025)

Consensus for International Investors: Focus on Fundamentals

The general consensus among these leading experts points to a U.S. housing market that, while still facing affordability challenges and higher-than-pre-pandemic interest rates, is moving towards greater stability and health. For international investors, this reinforces the strategy of:

• Prioritizing Resilient Markets: Focus on regions with strong economic fundamentals, diversified job growth, and sustainable affordability (as discussed in our previous articles like Cashflow Rentals, “US Housing Affordability: A Core Metric for Resilient & Profitable International Investment”).
• Long-Term Perspective: Avoid speculative plays and instead concentrate on properties that can generate consistent cash flow and offer reliable long-term appreciation.
• Leveraging Data: Use these expert forecasts to inform your market selection, but always couple them with hyper-local research.

Related: Guide to U.S. Taxes for International Property Investors

Key Factors Influencing the U.S. Real Estate Market Outlook for International Investors

Several critical factors underpin these expert predictions and will continue to shape the U.S. housing market for international investors in 2025 and 2026.

Mortgage Rate Trajectory: The “Magic Bullet”

The path of U.S. mortgage rates remains a central factor. While recent shifts have kept rates elevated, the anticipation of potential Federal Reserve rate cuts (though perhaps slower than initially hoped) could provide a much-needed boost to buyer demand. Lower rates translate to improved affordability, bringing more prospective buyers into the market, which in turn benefits the rental market by driving up demand from those who may still find ownership challenging.

For international investors, understanding access to financing, such as Foreign National Mortgages and DSCR loans, becomes even more crucial in this environment. These specialized loan products can provide a pathway to investment even with current rate levels.

Persistent Housing Supply Deficit

Despite new construction, the U.S. continues to face a significant undersupply of homes. NAR consistently highlights this shortage (estimated at nearly 4 million homes nationwide). This persistent imbalance between supply and demand acts as a floor for prices, preventing widespread crashes even amidst affordability concerns. For international investors, this undersupply signals a fundamental demand that supports property values over the long term, particularly in growing, affordable markets.

Strong Economic Fundamentals & Job Growth

The resilience of the U.S. economy, marked by robust job growth and wage increases, provides a stable backdrop. New jobs attract residents, fuelling housing demand (both rental and purchase) and underpinning property values. This steady economic activity, especially in diversified regional economies, minimizes the risk for international investors.

Low Levels of Distressed Sales

Mortgage Bankers Association data indicates low levels of serious mortgage delinquencies, suggesting that most homeowners are in a strong equity position and are not facing pressure to sell. This lack of distressed inventory further supports price stability and reduces the risk of large-scale market corrections.

Related: Guide to Buying U.S. Property for UK Investors

Conclusion: Strategic Investment in a Stabilizing Market

NAR’s latest predictions for 2025 and 2026, reinforced by other leading forecasts, paint a picture of a U.S. housing market moving towards greater equilibrium. While challenges like elevated mortgage rates and affordability persist, the underlying demand, coupled with a slowly improving supply, suggests a future of moderate appreciation and increased sales activity.

For international investors, this outlook underscores the importance of a strategic, data-driven approach. By focusing on fundamentally strong, affordable markets, and leveraging tailored financing solutions, global property investors can confidently navigate these evolving dynamics to secure stable assets, achieve consistent cash flow, and build lasting wealth in the U.S. real estate market.

Frequently Asked Questions (FAQs) for International Investors on U.S. Housing Market Predictions

Here are answers to common questions international investors have about the latest U.S. housing market forecasts for 2025 and 2026.

Q: What are NAR’s key predictions for U.S. home prices in 2025 and 2026?

A: NAR predicts median U.S. home prices to increase by 3% in 2025 and 4% in 2026, indicating a return to more sustainable appreciation rates after previous rapid surges.

Q: How will home sales evolve in 2025 and 2026 according to NAR?

A: NAR forecasts existing home sales to rise 6% in 2025 and 11% in 2026. New home sales are also expected to climb by 10% in 2025 and 5% in 2026, driven by improving market conditions and efforts to address housing supply.

Q: What is the forecast for U.S. mortgage rates in 2025 and 2026?

A: NAR anticipates mortgage rates to average around 6.4% in the second half of 2025 and dip to 6.1% in 2026. Fannie Mae’s May 2025 forecast is even more optimistic, predicting 6.1% by end-2025 and 5.8% by end-2026.

Q: Why are expert forecasts important for international investors?

A: Expert forecasts provide international investors with a data-driven understanding of market trends, helping them make informed decisions about where and when to invest, assess risks, and identify opportunities for stable returns and consistent cash flow.

Q: How does the housing supply deficit impact these predictions for investors?

A: The persistent undersupply of homes in the U.S. acts as a floor for prices, supporting property values and preventing widespread crashes, even amidst affordability concerns. For investors, this indicates a fundamental demand that underpins long-term growth.

Q: Are there specific regions that international investors should focus on given these forecasts?

A: While forecasts are national, the expert consensus on market divergence means international investors should focus on fundamentally strong, affordable markets with robust job growth and sustainable demand for more consistent returns and cash flow.

Q: What is the role of the U.S. economy and job growth in the housing market outlook?

A: A strong U.S. economy with robust job growth and rising wages provides a stable foundation for the housing market. New jobs attract residents, which fuels housing demand and supports property values, minimizing risk for international investors.

Q: How can international investors finance U.S. properties with the current mortgage rate outlook?

A: International investors can explore specialized financing options such as Foreign National Mortgages and DSCR loans. These products are designed to cater to non-resident buyers, often qualifying based on the property’s income potential, making investment feasible even with current rates.

Q: What should be the primary focus for international investors in the U.S. housing market given these predictions?

A: International investors should maintain a strategic, long-term perspective, focusing on acquiring properties in fundamentally strong and affordable markets that offer consistent cash flow and sustainable appreciation, rather than chasing short-term speculative gains.