If the housing market feels confusing right now, you’re not alone.

At the end of 2025, economists were forecasting a much stronger housing market for 2026. Mortgage rates were expected to decline, affordability was anticipated to improve, and home sales were projected to increase.

Instead, persistent inflation, economic uncertainty, and geopolitical tensions have kept mortgage rates higher than expected, causing many buyers to remain on the sidelines.

As a result, several major housing organizations—including Fannie Mae, the Mortgage Bankers Association, Wells Fargo, and the National Association of Realtors—recently revised their housing forecasts for the remainder of 2026.

The Revised 2026 Housing Forecast

Source: Fannie Mae, Mortgage Bankers Association, Wells Fargo, National Association of Realtors

The updated projections tell an interesting story:

• Mortgage rate forecasts increased from 6.12% to 6.37%
• Existing home sales projections declined from 4.5 million to 4.2 million
• New home sales projections fell from 720,000 to 680,000
• Yet median home price appreciation was revised upward from 2.1% to 2.6%

Think about that for a moment.

Despite higher mortgage rates and fewer projected home sales, economists are now forecasting stronger home price growth than they were just six months ago.

Why?

Because inventory remains constrained and there still are not enough homes available to satisfy buyer demand.

Rhode Island Continues to Face a Housing Shortage

That national trend is especially relevant here in Rhode Island.

While higher mortgage rates have slowed some buyer activity, inventory remains exceptionally tight. Rhode Island continues to operate with roughly 2.0 to 2.2 months of housing supply, well below the 5 to 6 months considered a balanced market.

Recent Rhode Island housing data shows median single-family home prices hovering around the $500,000 mark, demonstrating the resilience of our local market despite affordability challenges.

In communities across Rhode Island—including Barrington, Bristol, East Providence, Cumberland, Lincoln, and many parts of Providence County—well-priced homes continue to attract strong interest because demand still exceeds available supply.

Simply put, Rhode Island has not built enough housing to keep pace with demand.

Mortgage Rates Remain Higher Than Expected

Many experts entered 2026 expecting mortgage rates to settle closer to the low-6% range. Instead, rates have remained in the mid-6% range for much of the year.

While that has certainly impacted affordability, it’s important to remember that today’s rates remain below the highs experienced in recent years.

Many buyers are waiting for rates to decline before making a move. The challenge with that strategy is that lower rates often bring more competition into the market. When rates eventually fall, many sidelined buyers are expected to re-enter the market simultaneously.

As Lawrence Yun, Chief Economist of the National Association of Realtors, has noted, there is significant pent-up demand waiting on the sidelines.

Home Prices Are Still Expected to Rise

Perhaps the most important takeaway from the revised forecast is that economists are still projecting home price appreciation in 2026.

In fact, they increased their forecast.

While appreciation is expected to be more moderate than the rapid gains seen during the pandemic-era market, experts continue to believe that limited inventory will support home values nationwide.

That outlook aligns closely with what we’re seeing throughout Rhode Island.

The New York Times recently highlighted Providence as one of the country’s most desirable places to live, continuing to attract buyers relocating from higher-cost metropolitan markets. That ongoing demand provides additional support for housing values throughout our state.

For buyers hoping prices will decline significantly, the data simply doesn’t support that expectation right now.

What This Means for Sellers

Sellers continue to benefit from limited inventory and steady demand, but today’s market requires more strategy than it did several years ago.

Buyers have become increasingly discerning. They are paying close attention to condition, pricing, and overall value.

The homes achieving the strongest results are those that are thoughtfully prepared, professionally marketed, and strategically priced from the beginning.

That’s why my Huard Hustle approach focuses on maximizing value long before a property hits the market. From staging recommendations and contractor coordination to pricing strategy and negotiation, every detail matters.

What This Means for Buyers

For buyers, today’s market offers opportunities that simply weren’t available during the height of the pandemic frenzy.

Inspection contingencies are becoming more common. Some sellers are offering concessions. Buyers often have more time to make informed decisions.

At the same time, home prices are still projected to rise, both nationally and here in Rhode Island.

That means waiting for dramatically lower prices may not be the best strategy. Instead, buyers should focus on understanding their options, preparing financially, and having a plan in place when the right opportunity presents itself.

The Bottom Line

The housing market hasn’t rebounded as quickly as economists expected at the start of 2026. Higher mortgage rates and economic uncertainty have slowed sales activity nationwide.

But the most important takeaway from the revised forecast is this:

Despite higher rates and fewer projected home sales, experts are forecasting even stronger home price appreciation than they were six months ago.

Here in Rhode Island, where inventory remains exceptionally limited, that dynamic is even more pronounced.

Real estate remains local. While national headlines provide context, understanding what’s happening in your specific market is what matters most when making a buying or selling decision.

If you’re wondering how today’s market conditions impact your plans for the remainder of 2026, I’d be happy to help you create a strategy tailored to your goals.