T
he 43‑day federal shutdown did not halt the housing market. In October, existing‑home sales edged up 1.2 % year‑over‑year, according to the National Association of REALTORS® (NAR). Economists expect this uptick to persist into 2026, as mortgage rates are projected to ease further, removing a key barrier for buyers.

    NAR’s chief economist, Lawrence Yun, noted that lower mortgage rates helped sustain October sales despite the shutdown. He added that falling rents should curb inflation, prompting the Federal Reserve to keep cutting rates and easing its quantitative tightening. Because Fed policy indirectly influences mortgage rates, a softer monetary stance should attract more buyers.

    Mortgage rates have slipped from roughly 7 % at the start of the year to an average of 6.25 % in October. Even as rates decline, home prices continue to climb, though some markets are experiencing modest adjustments that reflect regional variations. Existing‑home sales—including single‑family homes, townhomes, condos, and co‑ops—rose 1.7 % compared to a year ago. Mortgage applications for purchases jumped 26 % year‑over‑year in the most recent week, indicating that more buyers are preparing to enter the market.

    Yun forecasted a double‑digit rebound in 2026, with sales up 14 % from 2025’s largely stagnant pace. He emphasized that 2026 will likely be the first year of measurable growth. “Next year is when we’ll see a real uptick in sales,” he told attendees at the Residential Economic Issues and Trends Forum.

    Home prices remain robust. The median existing‑home price in October climbed 2.1 % year‑over‑year to $415,200. NAR projects a 4 % rise in median prices in 2026, continuing the upward trend. While inventories have improved by about 11 % from a year ago, supply remains tight in many markets, especially those with the leanest inventories, which see the largest price gains. Distressed sales—foreclosures and short sales—are still low, at just 2 % of October transactions, unchanged from a year ago.

    Equity gains have also fueled the market. Many move‑up buyers are leveraging home equity for their next purchase, contributing to a high share of all‑cash transactions—29 % of October sales, per the latest REALTORS® Confidence Index. This trend underscores the strength of homeowner equity and its role in sustaining demand.

    First‑time buyers have hit a record low, comprising only 21 % of all sales, far below the historical 40 % average. They are also older, with a median age of 40. However, October saw a modest uptick, with first‑time buyers accounting for 32 % of sales, up from 27 % a year ago. Yun explained that first‑time buyers face supply constraints in the Northeast and high prices in the West, but fare better in the Midwest and South, where inventory is more plentiful and affordable.

    Regional dynamics vary. In the Northeast, sales held steady month‑to‑month but were 4.3 % higher than a year ago, with a median price of $503,700—up 6.5 % from October 2024. The Midwest saw a 5.3 % month‑to‑month rise, with a median price of $319,500—up 4.6 % from a year ago. The South experienced a modest 0.5 % month‑to‑month increase, with a median price of $362,300—up 0.3 % from a year ago. The West, however, saw a 1.3 % month‑to‑month decline, with a median price of $628,500—up 0.1 % from a year ago.

    Across the country, three of the four major regions reported sales growth in October, except for the West. Homes are taking longer to sell, with a median of 34 days on the market in October, up from 29 days a year ago. Sellers are recognizing the importance of accurate pricing; properties that linger may require a price reduction to move.

    In summary, despite a prolonged shutdown, the housing market remains resilient. Lower mortgage rates, steady price growth, improving inventories, and strong equity positions are all contributing to a positive outlook. First‑time buyers are slowly rebounding, and regional variations suggest that supply constraints and price levels will continue to shape market dynamics into 2026.