High mortgage rates to keep U.S. housing market sluggish through 2028

High borrowing costs are still freezing the U.S. housing market in place, locking many owners into cheap mortgages while shutting out would-be buyers who cannot afford today’s monthly payments. In a Reuters poll of property specialists taken June 1 to June 11, the benchmark 30-year mortgage rate was forecast at 6.4% next quarter and 6.3% in the fourth quarter, with rates expected to stay above 6.0% through 2028.

That outlook leaves little room for a real rebound in affordability. Reuters said the 30-year rate has hovered around 6.6% in recent months, far above the roughly 4.3% average seen over the previous decade. Home prices are still rising, but only slowly: the S&P Cotality Case-Shiller 20-City Index is projected to gain 1.2% in 2026 and 2.0% in 2027, after a prior-year increase of just 1.4%, the weakest in 14 years. The index was at 341.74 in March, a reminder that even muted percentage gains are being applied to an already expensive market.

Sales are not collapsing, but they remain stuck in a low-turnover pattern. Existing-home sales, which make up about 90% of U.S. transactions, were expected in the Reuters poll to hold near an annualized 4.1 million units in the near term. May sales actually reached 4.17 million, the highest pace since December 2025, yet inventory was still only 1.55 million homes, equal to 4.5 months’ supply. The median existing-home price hit a May record of $429,300. That combination means fewer homes are changing hands, which also means less moving-related spending, softer remodeling demand tied to turn-over, and fewer transactions feeding local tax bases.

The squeeze is hitting first-time buyers hardest. Reuters said 12 of 19 analysts, nearly two-thirds, expected affordability for first-time buyers to worsen over the coming year. James Knightley of ING said it is becoming increasingly challenging for the typical American to get on the housing ladder, estimating the average mortgage for a home purchase at about $460,000, with monthly payments nearing $3,000, more than half of the median after-tax pay of the average American.

The policy backdrop offers little relief. A separate Reuters economists poll showed the Federal Reserve is expected to hold rates through the rest of 2026, while interest-rate futures are even pricing in at least one hike by year-end. J.P. Morgan Global Research has estimated the U.S. housing shortage at about 1.2 million homes, underscoring that even if borrowing costs ease later, supply constraints will keep the market from snapping back quickly.