Mid-Year Housing Outlook: Stabilizing but Subdued

Research evidence excerpt

Mid-Year Housing Outlook: Stabilizing but Subdued

Economics Research

6 July 2026 | 10:21AM EDT

US ECONOMICS ANALYST

n Residential investment faltered in the first half of the year on the back of Ronnie Walker

+1(917)343-4543 |

particularly poor weather and a sharp rebound in mortgage rates: after declining ronnie.walker@gs.com

Goldman Sachs & Co. LLC

8% annualized in Q1, residential fixed investment fell 5% annualized in Q2, we

estimate. In this Analyst, we review our key forecasts for the housing market for

the rest of the year.

n Sustained higher mortgage rates will continue to have their most pronounced

impact on housing turnover. Almost 80% of mortgage borrowers have interest

rates below current market rates, and almost 60% have rates 2pp below market

rates, strongly disincentivizing them from moving. As a result, we expect

annualized existing home sales of just 4.2mn in 2026H2, 3% above the pace of

2026H1 but 22% below 2019.

n The longstanding housing shortage has kept single-family homebuilding

extremely resistant to higher interest rates, but normalizing supply-demand

balances and margins for homebuilders have led to a moderate slowdown in

single-family housing starts. Single-family starts have declined by 2% so far this

year compared to last year but have averaged 4% above 2019 levels despite 3pp

higher mortgage rates today. We expect single-family housing starts to total

0.92mn this year (vs. 0.94mn in 2025) and to end the year around a 0.93mn

annualized pace.

n We expect housing demand to remain tepid. On the positive side, domestic

demographic trends remain supportive, and survey-based measures of purchase

intentions have improved. But on the negative side, reduced immigration will

continue to weigh on household formation, and income growth is poor. The