Home sales will increase during the next two years, while mortgage rates likely will hover around 6%, National Association of Realtors® (NAR) Chief Economist Lawrence Yun predicted on Friday.

Yun analyzed the state of the U.S. residential real estate market and shared his 2025-2026 outlook during a forum at the 2024 NAR NXT, The REALTOR® Experience in Boston.

After a challenging 2023 and 2024, Yun projected new-home sales will increase 11% in 2025 and 8% in 2026, while the median home price will rise 2% in both years. He said existing-home sales are set to increase as well.

“Maybe the worst is coming to an end,” he said. “I think there’s going to be roughly a 10% boost of existing-home sales in 2025 and 2026.”

Yun also expects six to eight more interest rate cuts, including four in 2025, making a 6% mortgage rate the norm. “Are we going to go back to 4%? Per my forecast, unfortunately, we will not,” he said. “It’s more likely that we’ll go back to 6%. That will be the new normal, bouncing around 5.5%-6.5%.”

Record employment also portends well for the real estate industry, Yun said.

“When more people work, they have the capacity or they’re in a better position to buy a home,” he said. “Home sales depend mainly on jobs and mortgage rates.”