Despite a slow start driven by winter weather and lingering rate pressure, Lawrence Yun, NAR’s Chief Economist, said multiple indicators suggest the housing market is positioned for recovery. During January’s Broker Power Hour, presented by the National Association of REALTORS®, Yun offered brokers a data-driven look at what lies ahead and why this year could mark a meaningful shift for the industry.
“I still believe that this year we will see a meaningful recovery,” Yun said. “I want to apply logic. I want to show you the data, and I think things are really playing out nicely for a good recovery this year.”
Three Years of Suppressed Activity
Yun framed the current moment by revisiting the dramatic swings of the last several years. The ultra-low mortgage rates of 2020 and 2021 fueled a frenzied market, followed by an abrupt reversal in 2022 as the Federal Reserve raised rates from roughly 3% to near 8%. The result: fewer buyers due to affordability pressures and fewer sellers, as those who might consider moving opted to stay locked into low-rate mortgages.
Yun emphasized that the challenge was never a lack of demand but rather affordability and inventory constraints.
Signs of Momentum Returning
Looking at seasonally adjusted data, Yun pointed to early indications that sales activity may be turning a corner, noting that “the final months of data in 2025 show possible light at the end of the tunnel,” he said.
Preliminary MLS data also suggests modest year-over-year gains in January, even in what is traditionally one of the slowest months of the year. Prices are slightly higher, contract signings are edging up and unit sales are showing early improvement, though Yun cautioned inventory growth has recently stalled.
“We need more inventory,” he said plainly. “Many markets [are] indicating that if they have more inventory, they can get more sales done.”
A Tale of Two Markets
Yun highlighted the growing divide between luxury and entry-level segments. Higher-priced homes continue to account for a larger share of transactions, driven partly by strong equity positions and record stock market wealth. While upper-tier transactions are moving, affordability remains a barrier for first-time buyers, pushing the typical first-time buyer age to 40.
This dynamic has implications for agent training and market strategy, which brokers will want to account for in their plans for education and staffing, making sure agents have the resources they need to help the clients on both sides of the spectrum.
Why Home Prices Remain Resilient
Yun pushed back strongly on narratives predicting a housing crash, emphasizing that today’s conditions look nothing like the 2008 foreclosure crisis.
“About 2% of all home sales currently are distressed property sales,” he said. “During the foreclosure crisis in 2010, one-third of the property transactions were distressed property sales.”
Low delinquency rates, minimal foreclosures and strong equity positions continue to support prices nationwide.
“Any discussion of a 30% price decline, those are nonsense,” Yun said.
Capital Gains and Inventory Constraints
One of the most actionable issues Yun raised for brokers is the growing impact of capital gains taxes on homeowner mobility. Currently single tax filers can exempt $250,000 in capital gains tax when they sell their home, and married filers can exempt $500,000 in gain. Those figures haven’t increased since 1997.
An estimated 13 million homeowners would face capital gains taxes if they sold, Yun said. When owners are discouraged from selling to avoid the tax, it limits inventory.
He noted that there’s bipartisan interest in expanding the exemption—or even to eliminate capital gains taxes on the sale of a home—a policy shift that could unlock inventory and increase transaction volume.
Mortgage Rates and Broker Opportunity
Yun expects mortgage rates to continue trending lower, even if not in a straight line.
“I think it’s just inevitable we are going to get a 6% mortgage rate or a 5.9% mortgage rate,” he said, adding that after years of 7%–8% rates, buyers may perceive 6% as a psychological turning point.
Mortgage application data already reflects renewed buyer interest, signaling pent-up demand that brokers should be preparing to serve.
“The desire to enter the market has already turned higher,” Yun said, which signals “more inventory, lower mortgage rates, more transactions, more business opportunity for you and your agents out there.”
The Outlook for 2026
Yun’s forecast of a 14% year-over-year increase in existing-home sales in 2026 has drawn skepticism, he said, but that gain is consistent with typical post-downturn recoveries.
“When the housing market begins to recover after a downturn, getting a double-digit percentage recovery is quite common,” he said.
Even with that growth, Yun noted, the market would remain below pre-COVID transaction levels, underscoring both the scale of the contraction and the runway for future growth.
“I think you are looking at a very solid year,” he said.
Bottom line for brokers: Keep the fundamentals in sight. Decisions leaders make now around staffing, lead capture and conversion, and client education will shape who is best positioned as activity accelerates.
