In its most recent monthly Economic Update, America’s Credit Unions Chief Economist Curt Long took a look at the data behind the housing market, and what credit unions might expect in 2026.
Referencing the contradictory nature of the data on employment and consumer spending, Long suggested there’s a clearer picture on housing: “One of the few places in the economy we can speak about definitively is housing, and the picture there is not good.”
According to Long, the combination of sales activity being down roughly 20 percent since 2019, construction activity declining, and employment growth in the homebuilding sector being flat means the “housing sector is in recession.”
Long points to the increase in supply in multifamily housing options and the deflation in rental rates since mid-2022 being a key factor to the slowing market. This in combination with homebuying sentiment at “historically low” levels and housing affordability still being at above the 30 percent threshold (though improving) paints a bleak picture.
With average mortgage rates on 30-year fixed mortgages still above 6 percent, rate lock-in continues to be an issue. Following the pandemic and subsequent drop in mortgage rates to below 3 percent, the share of outstanding mortgages with those low rates catapulted to approximately 20 percent of the market. “Home owners with 3 or 4 percent mortgages who might otherwise be looking to trade up are staying put because they don’t want to increase their financing costs,” says Long.
Though the share of mortgages of over 6 percent is growing Long says “it’s important to keep in mind that those households with 6 percent mortgages have not seen much price appreciation in recent years, so they likely don’t have much equity at this point.”
Lastly, Long speculates that while sales activity might not improve much in 2026, refinances could increase, though only if rates drop to the low fives, and he sees that as unlikely in 2026.
To read the full release and watch the video, visit the America’s Credit Unions website.
