Weekly Real Estate News
The U.S. housing market may have another difficult year ahead, even if mortgage rates ease. Goldman Sachs expects existing-home sales to fall to 3.9 million in 2027, slightly below its forecast of 4 million this year, as high borrowing costs continue to keep buyers on the sidelines and discourage homeowners from moving.
The projection, outlined in an October 19 research note by Goldman Sachs economist Ronnie Walker and reported Tuesday by Yahoo Finance and MarketWatch, would leave annual existing-home transactions roughly 26% below their 2019 level.
The problem is not only the price of buying a home. It is also the cost of giving up a mortgage secured when interest rates were far lower.
The lock-in effect remains powerful
According to the Goldman analysis, more than 95% of mortgage borrowers have an interest rate below today’s market rate. About 65% have loans with rates at least two percentage points below current levels. That creates a substantial financial penalty for owners who would have to replace their existing mortgage when purchasing another home.
The bank’s economists expect mortgage rates to decline to approximately 6.4% by the end of 2027, according to Fortune’s reporting. Even so, the firm sees affordability remaining strained and sales activity failing to recover. Goldman projects home prices will increase just 0.8% next year, after an estimated 1.1% rise in 2026.
Those projections are forecasts, not established outcomes, and could change as interest rates, employment, inflation and housing supply evolve. WRE News has not independently obtained the complete Goldman Sachs client note.
Housing data add to the concern
The forecast arrived as the National Association of Realtors reported that its pending-home-sales index fell 7.3% in September to 66.0, the lowest reading in the series’ history. Pending sales track signed contracts and can offer an early indication of future closed transactions.
For mortgage lenders and real estate brokerages, a 2027 market near 3.9 million existing-home sales would mean continued competition for a limited pool of purchase transactions. Homebuilders may also face pressure if buyers remain unable to qualify for financing or are reluctant to commit at today’s monthly payments.
There are countervailing forces. Household income growth, demographic demand and improving inventory could support activity. But Goldman sees elevated mortgage rates and reduced purchase intentions outweighing those positives in the near term.
The bank’s outlook is separate from Fannie Mae’s recent mortgage-market forecast, which uses different assumptions. The two projections should not be treated as interchangeable.
Sources: Yahoo Finance reporting on Goldman’s October 19 note; Fortune analysis; Reuters on September pending home sales.
