Why US mortgage rates could decide 237,000 more home sales in 2026

One chart to watch: how real estate USA will move in 2026

If you follow the real estate USA market, one relationship will explain most of 2026: the slow dance between the 10-year Treasury yield and the 30-year mortgage rate. Analyst Logan Mohtashami’s 2026 outlook boils down to a few measurable thresholds — and those thresholds are the difference between a slightly easier market for buyers or another year of muted activity for sellers.

Mohtashami’s forecast is practical and numbers-driven. He expects the 10-year Treasury yield to range between 3.80% and 4.60% and the 30-year mortgage rate to range between 5.75% and 6.75% in 2026. Those bands are narrower than the wild swings of the recent past, but they still matter for housing demand, prices and investor returns.

Market snapshot: what the forecasts mean in plain English

Mohtashami’s outlook is centered on three linked ideas: mortgage rates, mortgage spreads (the gap between the 10-year yield and the 30-year mortgage), and inventory. Read together they create the supply-demand dynamics that set housing prices and sales volume.

Key figures from the forecast:

• 10-year Treasury yield: 3.80% to 4.60%
• 30-year fixed mortgage rate: 5.75% to 6.75%
• Mortgage spread target: about 1.80% (a return to more normal historical spreads)
• If mortgage rates stay below 6.25%: potentially +237,000 existing home sales in 2026
• Home-price change forecast: down roughly 0.62% in 2026
• Active inventory in 2025 exceeded 1.52 million units, which Mohtashami treats as a marker that the acute inventory shortage is over

I find the forecast refreshingly clear: small shifts around the 6% mortgage rate mark have outsized effects on buyer activity. For buyers, that means your window for stronger negotiating power is tied to whether rates sink toward the low end of Mohtashami’s range. For investors, it means pay attention to local inventory and rent fundamentals rather than national price headlines.

Why mortgage spreads matter more than most buyers realize

Mortgage spreads are dull-sounding but crucial. Mohtashami defines the spread as the difference between the 10-year Treasury yield and the 30-year mortgage rate. That gap swelled to 3.10% in 2023, tightening from the elevated levels as mortgage markets normalized.

Historical reference points:

• Recent history’s normal range: 1.60% to 1.80%
• 2024 average spread: 2.54%
• End of 2025 spread: 2.05%
• Mohtashami expects spreads to move back toward ~1.80% in 2026

When spreads compress toward that normal range, mortgage rates can fall even if the 10-year yield does not plunge. That is why Mohtashami thinks mortgage rates can sit below the peaks seen in 2024–25 without a dramatic drop in bond yields. The practical consequence is that mortgage affordability improves modestly as spreads tighten, which in turn nudges more buyers into the market.

But spreads can widen again. Credit market stress, lender liquidity issues, or a sudden shift in bank funding costs would push spreads out and keep mortgage rates stubbornly high even if Treasury yields fall.

Sales and prices: thresholds that trigger change

Mohtashami repeatedly emphasizes rate thresholds because data shows buyer behavior reacting to them.

• Housing data tends to improve when mortgage rates fall below 6.64% and improve further as they approach 6%.
• If rates can stay below 6.25%, Mohtashami estimates an additional 237,000 existing home sales in 2026 compared with the baseline.

The price outlook is more restrained. After a couple of years when lower rates pushed prices higher, Mohtashami predicts home prices will fall about 0.62% in 2026. He uses the S&P Cotality Case-Shiller price index as the pricing metric in his work.

Why a modest price decline rather than a crash?

• Inventory growth is easing the acute shortage seen in 2020–22; active inventory topped 1.52 million in 2025 and months’ supply exceeded four months, a threshold Mohtashami uses to say the shortage has ended.
• Even with more supply, wages are rising faster than home prices in some markets, which helps affordability over time.

Regional effects will vary. Places with persistent supply constraints and strong job growth will outperform, while markets with weaker employment or rising inventory can see sharper price pressure.

Practical playbook for buyers, sellers and investors

Here’s how to act on this forecast depending on your role.

Buyers (owner-occupiers):

• If you are eligible and rates fall into the low- to mid-6% range, you will have more choices and negotiating leverage. Consider locking if you see a deal that fits your long-term plans, because rates could move in either direction depending on labor data and Fed policy.
• Watch local inventory and price-cut percentages. Inventory upticks mean better bargaining power even if rates remain above 6%.

Sellers:

• Price competitively in markets where inventory is growing. The national forecast for prices is slightly negative, but local markets can diverge.
• If you need to sell and rates are near 6%, consider small concessions or paying for a rate buydown to attract buyers who are rate-sensitive.

Investors (buy-to-rent or buy-to-flip):

• Focus on cash-flow metrics and rent-growth prospects rather than national price appreciation assumptions. If prices fall modestly, total returns for buy-and-hold investors still depend heavily on rent and cap rates.
• Keep an eye on financing spreads and lender appetite. Wider spreads increase refinance risk and can reduce exit options.

Mortgage borrowers and refinancers:

• Mohtashami is cautious about calling for sub-5.75% mortgage rates while the Fed is in a neutral policy stance. That means refinance opportunities below 5.75% are unlikely unless the Fed changes course or the bond market sends yields much lower.
• Shop and compare lender fees; even small differences in points can make or break a refinance in this rate environment.

Risks and the political X factor

Mohtashami highlights two main risks that could push rates away from his baseline.

1. Labor market surprises: Stronger-than-expected job growth would push bond yields and mortgage rates higher. He notes that if we created 100,000-plus jobs with a falling unemployment rate, yields and rates would move up — as happened in previous years.

2. Fed leadership and political policy: The potential for significant housing policy changes under the current administration (including proposals around new mortgage products, changes at Fannie Mae and Freddie Mac, capital gain exemptions and a national housing emergency plan) is real. But Mohtashami is explicit: he does not factor political proposals into his economic forecast until laws change or concrete regulatory steps are taken. He also warns that if the bond market strongly opposes an administration’s choice for Fed chair, a nominee might withdraw.

Practical risk checklist for investors and buyers:

• Monitor weekly housing data: new listings, active inventory, price-cut percentage and mortgage rates.