July 2026 Housing Market Update: High Rates Keep Buyers Cautious as Home Prices Hold Near Record Levels

The summer housing market is proving just how sensitive buyers have become to mortgage rates. A small drop in borrowing costs brought more people back into the market in early July, but that improvement quickly faded when rates climbed again. At the same time, home prices remain near record highs, leaving many buyers with little room in their budgets.

There are some encouraging signs beneath the surface. Inflation improved in June, monthly housing payments are slightly lower than they were last year, and the national housing shortage has stopped growing as quickly. However, renewed oil-price concerns, limited inventory and mortgage rates in the mid-6% range continue to keep the market from gaining consistent momentum.

Zillow: Cooler Inflation Provides Some Relief, but Oil Prices Keep Rates Elevated

Mortgage rates faced two competing pressures during the first half of July. June inflation reports came in substantially cooler than expected, reducing the likelihood that the Federal Reserve would raise rates again in the near future. Before the reports were released, financial markets viewed another increase as close to a coin toss. Afterward, expectations shifted toward the Fed keeping rates unchanged.

That improvement was quickly offset by renewed tensions involving Iran, which pushed oil prices higher and raised concerns about what energy costs could mean for inflation in July. Because mortgage rates are closely tied to expectations about future inflation, higher oil prices can keep borrowing costs elevated, even when other economic reports are improving. Zillow now expects mortgage rates to ease only gradually, reaching approximately 6.4% by the end of 2026.

Housing activity was stronger in June despite the continued rate pressure. Zillow reported that home sales increased 5.9% compared with a year earlier, while new listings grew 3%. The typical monthly mortgage payment was also 2.5% below last year’s level, providing buyers with a modest improvement in affordability.

Zillow also reported that the national housing deficit held nearly flat in 2024 at approximately 4.7 million homes. The deficit increased by only 43,000 homes during the year, compared with increases of 257,000 in 2022 and 159,000 in 2023. Construction nearly kept pace with the creation of new households, but the country remains millions of homes short of what is needed. Affordability has also plateaued , although only about one-third of listings were affordable to a median-income household in 2024.

Redfin: Buyers Move Back Into the Market When Rates Dip, Then Retreat When They Rise

Redfin’s latest weekly numbers show how quickly homebuying activity can change when mortgage rates move. During the four weeks ending July 5, pending home sales increased 1.3% from the previous week, reaching their highest level since the first half of May. The weekly average mortgage rate had temporarily fallen to 6.43%, its lowest level in six weeks, reducing the median monthly housing payment to $2,598.

That rate relief did not last. By July 8, Redfin’s daily mortgage-rate average had risen to 6.68%. During the four weeks ending July 12, pending sales fell 2.2% from the previous week, marking the first weekly decline in a month. The decrease may partly reflect normal weekly volatility, but it also shows that many buyers are operating close to the limit of what they can afford.

Home prices remain another major obstacle. The median sale price nationwide reached $408,808 during the four weeks ending July 5, up 2.2% from a year earlier and only about $500 below the all-time high. One week later, the median price remained roughly $800 below the record. Even a relatively small increase in mortgage rates can make a near-record-priced home considerably more expensive each month.

Potential sellers are also becoming more hesitant. New listings fell 2.5% during the four weeks ending July 5 and declined another 1.2% during the following week, reaching their lowest level since the beginning of the year. Some homeowners are choosing to stay in place rather than give up a low mortgage rate or list their home during a period of subdued demand.

National Association of Realtors: Pending Sales Fall Across Every Region

The National Association of Realtors (NAR) reported that pending home sales fell 5.4% in June compared with May. Contract signings were also down 0.3% compared with June 2025. Pending sales declined month-over-month in all four major regions of the country, showing that the slowdown was not limited to one part of the market.

The Midwest recorded the largest monthly decline at 8.9%, followed by the West at 4.7%, the South at 4.1% and the Northeast at 3%. Compared with a year earlier, pending sales increased 2.2% in the Northeast and 0.3% in the Midwest. Sales declined 0.9% in the South and 1.1% in the West.

NAR Chief Economist Lawrence Yun pointed to elevated mortgage rates and record home prices as the primary reasons buyers remain cautious. The national median existing-home price reached a record $440,600 in June. These conditions are especially difficult for first-time buyers, who accounted for 33% of existing home purchases during the month. Before 2008, first-time buyers regularly represented around 40% of sales.

There are still signs that the market has improved from last year. Closed existing home sales were approximately 3% higher than in June 2025, although they declined 2.4% from May. Mortgage rates are also slightly lower than they were one year ago, and wage growth is beginning to outpace home-price growth. The larger problem is that the number of homes for sale increased by only 1.3% from last year, leaving many markets without enough inventory to create meaningful affordability improvements.

Steven Thomas: Orange County Home Values Have Reached a Plateau

Orange County’s housing market has shifted away from the rapid price growth of the pandemic and into a much more balanced environment. According to Steven Thomas, local home values are up only 1.2% over the past year. After increasing 8.2% in 2020, 15.2% in 2021 and 10.5% in 2022, price growth has slowed considerably.

Home values continued rising in 2023 and 2024 even though buyer demand was extremely low because the number of homes available for sale was even lower. By 2025, inventory had finally increased enough to stop further appreciation. Orange County values ended last year nearly unchanged, falling only 0.2%. Monthly gains have also been flat throughout 2026, increasing just 0.1% in April and 0.06% in May.

Current demand stands at 1,558 pending sales, nearly identical to the 1,565 recorded at the same point last year. Active inventory stands at 4,697 homes, which is 3% below last year but still well above the extremely limited supply seen in 2023 and 2024. With both demand and inventory close to last year’s levels, the market currently favors neither buyers nor sellers in a significant way.

Mortgage rates remain the factor most likely to change that balance. Thomas compares rates to the gas pedal for the housing market. Demand tends to increase when rates fall below 6.5% and move toward 6%. When rates remain above 6.5%, buyers lose purchasing power and the market slows. Orange County’s Expected Market Time has decreased to 90 days, compared with 92 days last year. Condominiums and townhomes are taking approximately 103 days to sell, while detached homes are moving faster at 82 days.

Five Key Takeaways from July’s Housing Market

1. Mortgage rates remain the market’s biggest obstacle. Cooler inflation provided some hope that borrowing costs could decline, but higher oil prices and renewed geopolitical uncertainty are keeping rates elevated.
2. Buyers are reacting quickly to even small rate changes. Pending sales increased when the weekly mortgage rate fell to 6.43%, then declined after rates moved higher again.
3. Home prices remain close to record levels. Redfin’s median sale price was just hundreds of dollars below its all-time high, while NAR reported a record national median existing-home price of $440,600.
4. The housing shortage has stopped getting significantly worse, but it remains severe. The national deficit held near 4.7 million homes in 2024 as construction nearly kept pace with household growth.
5. Orange County has moved into a balanced market. Local prices have largely plateaued, inventory and demand are close to last year’s levels, and neither buyers nor sellers currently hold a strong advantage.

Why We Share These Reports

At Nuvision, we keep a close watch on the housing market so our members can understand what is changing, what is holding steady and how those changes may affect their financial plans. Whether you are considering buying a home, selling, refinancing or simply planning for the future, having a clear view of the market can help you make better-informed decisions.

For more than 90 years, we have built trust by giving our members a level of care and confidence they will not find at other financial institutions. These monthly reports are one more way we help our members look beyond the headlines, understand the larger financial picture and move forward with confidence.

This content includes third-party information and opinions for informational purposes only and does not necessarily reflect the views of Nuvision or its representatives.