If you've been watching the housing market this year hoping for a turnaround, you're not alone. But National Association of Realtors Chief Economist Lawrence Yun has issued a grim revision to his 2026 housing market forecast, reflecting what many Rhode Island sellers have already felt firsthand: the unexpected surge in mortgage rates this year has fundamentally changed the game.
"Markets are constantly changing—some have a positive impact on the housing market, and others, negative. The big unpleasant event over recent months is the fast-rising mortgage rates, therefore further denting the market outlook," Yun tells Realtor.com. For context, as of October 27, 2026, the 30-year fixed mortgage rate stands at 7.33% according to Mortgage News Daily—substantially higher than anyone anticipated at the start of the year.
If you're preparing to sell your Rhode Island home or you've had your property on the market longer than expected, understanding what's happening at the national level—and what it means for our local market—can help you make smarter decisions about timing, pricing, and strategy.
From Optimism to Reality: How the Forecast Changed
Last November, Yun projected existing-home sales would rise 14% in 2026 from the three-decade low reached last year, while forecasting that median prices would grow by 4%. That was the outlook heading into this year—a genuine recovery on the horizon.
But the market had other plans.By April, Yun had already started tempering expectations, projecting that the existing-home sales volume would rise just 4% from last year.
Yun cited high interest rates, inflation, and growing economic instability from the Iran war as factors shaping his outlook.
Now, in his latest October update,Yun says he expects existing-home sales volume and prices to grow around 2% or less this year compared to 2025.
Regarding newly built homes, he projects new-home sales will decrease by 5% year over year.
That's a dramatic shift from a predicted 14% sales increase down to roughly 2%—and it all comes down to one factor.
Mortgage Rates: The Real Culprit
Yun says mortgage rates are the culprit for the grim revisions. Initially, he had predicted that mortgage rates would average around 6% for the year. Since then, rates have steadily climbed and have remained above 7% since the last week of September.
The impact has been swift and decisive.
At the Mortgage Bankers Association's annual conference earlier this month, MBA Chief Economist Mike Fratantoni predicted mortgage rates would remain around 7.3% for the rest of the year and hover above 7% through 2027.
Fratantoni pointed to structural economic issues driving this forecast:
"Inflation is too high, leading central banks to raise short-term rates, while budget deficits and debt are unsustainably high, leading bond investors to push up longer-term rates".
For sellers, this matters enormously. Every percentage point increase in mortgage rates shrinks the pool of qualified buyers who can afford your home at your asking price. When rates climb from 6.5% to over 7%, monthly payments jump by hundreds of dollars—and many potential buyers simply step back and wait.
Is There Light at the End of the Tunnel?
Despite the sobering near-term outlook, Yun isn't entirely pessimistic about the future.
Yun's latest predictions are roughly in line with the Realtor.com economic research team's 2026 housing forecast midyear update, which was released in July. That forecast predicted that, due to inflation, rising oil prices due to the war in Iran, and rising interest rates, existing-home sales prices would rise just 1.2% through the end of the year.
But looking ahead, there's cautious optimism.
At the recent Las Vegas gathering, Yun suggested that if mortgage rates trend downward in 2027, sidelined buyers would reenter the market.
Yun told the crowd of Las Vegas Realtors that he believed that interest rates were "the magic that drives the market".
"If somehow at the beginning of 2027 we see mortgage rates closer to 6%, we will see good buying activity at that time," Yun said.
He also made a counterintuitive point:
"In all past economic recessions—other than the subprime blowout—the interest rates moved down and home sales increased more in a recession than a nonrecession," he continued. In other words, if economic softening forces rates down, the housing market could actually see relief.
What This Means for Rhode Island Sellers
So how does all this national economic news translate to your decision to sell your home here in Rhode Island?
Inventory is still relatively tight. While sales volume may be sluggish, Rhode Island hasn't experienced a flood of new inventory. Homes that are priced right for current conditions and marketed effectively are still selling—they're just taking a bit longer, and buyers are more cautious and deliberate.
Pricing strategy matters more than ever. With fewer buyers active in the market and those who are shopping being highly rate-sensitive, overpricing even slightly can mean your home sits. Competitive pricing from day one, informed by current comparable sales (not what homes sold for in 2021), is critical.
Preparation and presentation are your competitive edge. In a market with fewer buyers, the homes that stand out win. Professional photography, staging, and making sure your home shows its absolute best aren't luxuries—they're necessities. At Slocum Home Team, we include professional photography, 3D tours, drone photography, and video marketing for every listing, because we know how much it matters in getting buyers through the door (virtual or otherwise).
Flexibility on timing can be an advantage. If you don't have to sell right this second, and if Yun and Fratantoni are right about potential rate relief in 2027, waiting a few months could bring more buyers back into the market. On the other hand, if you need to move for work, family, or other reasons, the right agent and strategy can still get your home sold at a fair price—it just requires realistic expectations and smart execution.
The buyer pool is more selective, but they're serious. The people shopping for homes right now aren't just browsing—they're committed. They've run the numbers, they're financially qualified, and they're ready to move when they find the right property. That means less tire-kicking and more serious negotiations when you do get an offer.
This is exactly the kind of market where having an experienced agent matters. Our day-to-day listing agreement means you're never locked in with no way out if things aren't working, and our 8-step process for both buyers and sellers ensures nothing falls through the cracks. We also offer tools like our free moving van for clients and Closing With a Cause, where a portion of every transaction goes to a local charity of your choice—because even in a challenging market, we believe in giving back to the Rhode Island communities we serve.
Moving Forward With Eyes Wide Open
The revised forecast from Lawrence Yun isn't what anyone hoped to hear, but it does give us clarity. Mortgage rates are the dominant force shaping the market right now, and until they come down meaningfully—whether that's late this year or in 2027—we're in a more cautious, slower-moving environment.
For Rhode Island sellers, that doesn't mean you can't sell. It means you need to be strategic, realistic, and patient. It means working with a professional who understands current conditions, knows how to position your home competitively, and has the marketing tools to reach every qualified buyer in the market.
If you're thinking about selling your Rhode Island home and want an honest conversation about what to expect, what your home is worth in today's market, and what it will take to get it sold, we're here. Give us a call at (401) 372-8976, email us at Hello@SlocumHomeTeam.com, or visit slocumhometeam.com. We'll walk you through the current landscape and build a plan that works for your timeline and goals—because even when the forecast looks grim, the right strategy and the right team make all the difference.
