Mid-Year Housing Market Update

What housing market trends have been present in the first half of 2026, and what can we expect for the rest of the year? Dr. Lisa Sturtevant, chief economist with Bright MLS, shared a mid-year housing update on yesterday’s PAR webinar. 

Home Prices and Inventory 

Sturtevant, who has over 20 years of experience in economic, demographic and housing market research, noted that across the country, home prices are continuing to rise, but are doing so more slowly in many markets. 

Inventory is still below 2019 levels and remains very tight in many markets in Pennsylvania, especially in central Pennsylvania. To the east, the Philly metro area is beginning to see more inventory. 

“Compared to where we were last year, May is the first time, frankly, that we’re seeing a little bit of signs of life in the housing market,” she observed. “I think people are starting to come to terms with mortgage rates in the 6.5% range. Buyers are having a little bit more room for negotiation. Sellers are pricing a little bit more conservatively. And if that continues, we should see pretty steady housing market growth through the summer.” 

She added that the high end of the market is doing just fine, as high-income buyers are less interest-rate-sensitive. In contrast, first-time buyers and moderate-income move-up buyers are struggling more with making the numbers work at a 6.5% mortgage rate. 

Job Growth 

Nationwide, the job market is seeing steady growth, Sturtevant shared. However, in Pennsylvania, it’s a bit bumpier. The commonwealth is seeing a bit of a slow down, but it’s still seeing positive job growth and a low unemployment rate.  

Inflation and Consumer Sentiment 

Inflation is on the rise again, primarily driven by fuel prices and conflict in the Middle East. Last month, it was at 4.2%. 

Increasing inflation and uncertainty about the current international/geopolitical scene are contributing factors to low consumer sentiment, Sturtevant added, as consumers feel hesitant and stressed about the current economic state. 

Forecast for 2026 and 2027 

“There is significant pent-up demand in the Pennsylvania housing market and in the national housing market,” she said, explaining that the reason there are slower sales isn’t that people are desiring homeownership less, but because of headwinds like higher mortgage rates, economic uncertainty and affordability challenges. 

“So, in my mind, the rest of 2026, and frankly into 2027, is really going to be a tug of war between pent-up demand and some of those other headwinds.” 

Moreover, Sturtevant said she did not see lower mortgage rates happening anytime soon, forecasting a 6.5% range, nor did she project prices falling in major markets in 2026 or 2027.  

“For 2026, I’m expecting there to be more home sales than there were in 2025, but definitely not back to long-term averages. This is still a resetting year – 2027 is going to be a resetting year as well. We’re forecasting sales of 4.9% YOY in the Philly metro area and sales up a little bit less in central Pennsylvania – again, primarily because inventory is so low – and then home prices suggesting softer home price growth than we’ve seen.” 

How can Realtors® help? 

“The best thing I think you can do is to continue to be the local expert to help answer questions and to help your buyer and seller clients navigate this very tricky market,” Sturtevant told Realtors®. 

She encouraged them to come equipped with local data to share with buyer/seller clients so that they can set their expectations with what’s going on in the market, not with what they’re hearing about the national housing market. She emphasized the importance of Realtors® knowing their local markets and having the data to back it up. 

Additionally, Sturtevant recommended Realtors® help sellers price appropriately and help buyers understand that they still need to act quickly. They should also know that their clients are dealing with a lot of economic uncertainty right now, and they may be getting incorrect answers from AI. 

Learn More 

Sturtevant also touched on the new Federal Reserve chair, data centers, buyers vs. sellers markets, pickleball courts and amenities, new construction activity and more. View the webinar recording to learn more. 

Reach out to Sturtevant at [email protected] for more data and other resources.