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| The Silicon Valley Association of Realtors (SILVAR) shares local housing data, sales trends, expert insights and other real estate-related topics. This week, the association shares expert insights from Lawrence Yun, chief economistof the National Association of Realtors, who recently delivered his 2026 housing forecast at the Computer History Museum in Mountain View. |
Powered by one of the strongest regional economies in the country, the Bay Area housing market is poised for a sales rebound in 2026 as interest rates decline, according to Lawrence Yun, chief economist of the National Association of Realtors.
He expects Bay Area inventory to rise and home prices to increase 2% to 6%.
“The Bay Area is … like the Renaissance Center … It’s the tech edge, the technology frontier,” he said while presenting his “Housing Market Trends and Forecast 2026″ to Realtors in Mountain View.
The region’s innovation-driven economy has intensified local housing challenges .First-time buyers — particularly those without family help for a down payment — face a major hurdle to homeownership, Yun said.
Homeowners benefit from record housing wealth, while non-homeowners are financially stretched, prompting many to consider moving to more affordable states.
Silicon Valley isn’t the only region that could see a stronger market this year. Yun painted a picture of a national market poised for recovery. After three years of sluggish sales nationwide following the pandemic surge, Yun believes lower mortgage rates will unlock pent-up demand. The National Association of Realtors estimates that if mortgage rates reach 6%, home sales could grow by about 14% nationwide over the next year.
Consumer sentiment and household debt
Despite a resilient job market and the absence of a recession, consumer sentiment remains deeply pessimistic. Citing the University of Michigan’s consumer sentiment index, Yun said Americans are “expressing huge displeasure” with the direction of the economy.
That stress is showing up in household debt. While mortgage payments remain largely current — “the only minimum that people are paying on time,” Yun noted — delinquency rates are rising for auto loans, credit cards and student debt. Still, he pushed back against fears of a housing crash. Today’s mortgages are largely high quality, and because homeowners are staying current on their payments, there is no surge of distressed properties. As a result, home prices are “in no danger of major decline.”
Mortgage rates and the 2026 outlook
A key driver of Yun’s 2026 outlook is a shift in Federal Reserve policy. With inflation easing but not fully resolved, the Fed is now more focused on a softening job market. “They see some weakness,” Yun said, which is pushing policymakers toward interest rate cuts.
While mortgage rates are unlikely to return to the historic lows of 3% to 4%, Yun expects the average 30-year fixed rate to fall to around 6%, down from recent peaks near 7% to 8%.
“The 6% mortgage rate will be better than what has happened in the past three years,” he said, adding that the decline will have a tangible impact on the market.
Yun concluded that while economic pressures persist, falling interest rates and strong mortgage fundamentals are setting the stage for a long-awaited rebound in housing sales.
Silicon Valley Association of Realtors (SILVAR) is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.
