The market’s reaction to President Trump’s Iran war caused mortgage rates to rise sharply. As a result, NAR plans to revise its bullish 14% sales growth forecast.
NAR’s chief economist told Inman this week that the spike in interest rates that quickly sucked up purchasing power heading into the spring home-buying season will hurt home sales for the rest of the year.
Looking ahead to 2026, Lawrence Yun of the National Association of Realtors offered perhaps the most optimistic outlook among housing economists, who thought 2026 could be a turning point after three years of stagnant sales at around 4 million units.
Lawrence Yun
Yun expected home sales to increase by 14% this year. But now that’s no longer his expectation, he exclusively told Inman.
“That’s going to change,” Yun said. “We’re still looking at it, but it’s likely to be revised down just because mortgage rates were higher than I expected due to the oil price shock. They were probably at 6% mortgage rates five minutes before the war started.”
Yun pointed to the 6% interest rate as an important criterion as buyers contend with historically high home prices. Interest rates soared from below 6% to 6.6% in the weeks following the start of military operations in Iran, causing buyers to retreat.
Yun admitted that this year’s sales had already been “sluggish.” But before the US and Israel bombed Iran on February 28, interest rates were trending in buyers’ favor.
“I actually had a good feeling about the prospect. [of higher sales]but current mortgage interest rates [are] “At 6.5%, my new forecast is that growth may slow this year. I still believe that overall home sales will grow to some extent this year,” Yun said.
As a result of the results, NAR is now preparing to revise its home sales forecast downward, with a new table likely to be released before Yoon appears on Inman on Tour Nashville later this month.
“The overall direction is that sales will not increase by 14% this year,” Yun said.
So far, there is no indication that many buyers are prepared to accept interest rates in the mid-6% range as acceptable.
That’s because, with home prices hovering near all-time highs, mortgage rates are the main way homebuyers gain an affordability advantage, Yun said.
“If mortgage rates don’t come down, it’s not really a matter of their desirability, willingness or preference, it’s that their financial capacity doesn’t exist at higher rates,” Yun said.
Yun noted that buyers are gradually returning to an atmosphere of affordability as wages continue to rise faster than home prices.
Keep scrolling to see an interactive timeline showing how mortgage rates have changed in 2026.
Interest rate fluctuation rate in 2026
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