First American data shows why affordability gridlock is keeping the US housing market barely moving in 2026
The US housing market has settled into a phase of unusual inertia. Existing-home sales registered just 3.1% of US households in June, well below the 1991-to-2019 historical average of approximately 4.5%.
Meanwhile, annual home-price growth decelerated to 1.1%, according to analysis published this month by First American Financial Corporation.
Deputy Chief Economist Odeta Kushi frames the dynamic as a "low-turn, slow-burn" market, borrowing from the labor market concept of "low hire, low fire."
Just as today's employers are hesitant to add or shed workers, homeowners are sitting tight, unwilling to trade sub-4% mortgages for loans priced at more than double that rate. Life events still prompt moves.
Discretionary decisions, such as trading up for more space, relocating for lifestyle reasons, are being deferred by the millions.
The rate lock-in effect driving the slowdown
More than 50% of borrowers still carry mortgage rates below 4%, according to Realtor.com. For those homeowners, selling means absorbing a monthly payment roughly twice as large on a home that has also risen in price.
"The housing market recalibrated rather than reset," Jake Krimmel, senior economist at Realtor.com in Santa Clara, California, said in February.
"Supply and demand moved in the directions economic theory would suggest, but prices proved far more resilient than many anticipated, leaving today's affordability challenges firmly in place."
Low turnover has kept listings constrained, sustaining competition in many local markets and preventing the inventory buildup that would normally push prices lower.
That stalled dynamic aligns with assessments across the industry, where mortgage rates are expected to keep the housing market subdued through 2026, with the 30-year fixed rate holding in the mid-6% corridor for the foreseeable future.
Sam Khater of Freddie Mac said that while higher mortgage rates continue to affect affordability, improving inventory and slightly lower listing prices suggest the housing market is showing signs of adjustment.https://t.co/yiihzcmduM
— Mortgage Professional America Magazine (@MPAMagazineUS) August 7, 2026
What it will take to shift gears
First American's Existing-Home Sales Outlook projects a 0.4% monthly gain in July compared with June, and approximately 2% growth year over year, with a resilient economy and looser credit conditions cited as the primary contributors.
Kushi is clear, however, that a sustained recovery demands two things still in short supply: improved purchasing power and greater homeowner mobility.
The timing asymmetry matters. Rate relief could revive buyer demand relatively quickly. Sellers face a harder calculation, particularly those holding 30-year fixed mortgages locked near 3% in 2020 and 2021.
As Amir Nurani, broker-owner at Left Coast Leaders in California, told Mortgage Professional America in April, "There's not going to be this magical moment where rates are just going to fall."
That assessment tracks closely with broader market data, which showed existing-home sales climbing to their highest level since 2022 before stalling in mid-2026, as a brief rate dip in April gave way to renewed pressure above 6.4%.
Until affordability improves, confidence firms, and more listings reach the market, the US housing market is likely to remain exactly where First American describes it: moving slowly enough that progress is difficult to detect from one month to the next.
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