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The traditional peak season for homebuying and selling is winding down after another underwhelming showing.
For the fourth straight year, high home prices and elevated mortgage rates appear to have sidelined many buyers this spring, even though slightly lower mortgage rates, solid wage growth, and higher inventory of for-sale homes improved their buying power.
Home sales so far this year are up less than 1 percentage point from 2025 levels, according to National Association of Realtors data, a particularly meager improvement considering that sales last year tied for a three-decade low.
Read more: Want to buy a house before the end of 2026? Follow these crucial steps.
Mortgage rates are likely to blame. A brief dip below 6% in late February was quickly undone when the US attacked Iran and oil prices and inflation spiked. Rates spent most of the spring around 6.5%, a number that, while lower than last year’s 6.7% to 6.8% average, discouraged buyers and sellers alike.
“I think a lot of the market is just crying for a 5%-ish interest rate,” said Sean Zanganeh, a real estate agent in San Diego.
He had a busy start to the year, when rates were lower, but said sales activity, especially for the middle tier of the market, slowed down after they rose. The median list price for a home in the San Diego metro area is nearly $1 million, meaning even small increases in mortgage rates can have a significant effect on monthly payments.
“An extra $500 [a month] to a $1 million buyer in San Diego — which is roughly our average price point — that’s a pretty big delta on their carrying cost,” he said.
Signs of ‘resiliency’
Although persistently higher rates have sparked companies including Zillow (ZG) and Realtor.com to pare back their expectations for home sales this year, housing market watchers say the numbers aren’t all doom and gloom.
Sales staying in positive territory even as higher rates eroded affordability is “a testament to some of the resiliency in the housing market, but also some of the pent-up demand,” said Odeta Kushi, deputy chief economist at First American Financial Corporation.
Many homebuyers who did enter the market this year were able to take advantage of more favorable conditions. For-sale inventory levels rose in much of the country, giving buyers more options, and home price appreciation on average trailed wage growth. In some parts of the country, especially cities in Florida, the Southeast, and the Mountain West, prices are now down from the peaks of a few years ago.
