Those holding out hope for 2026 to be a banner year in the U.S. real estate market should be ready for a gut check.
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Compass Chief Economist Mike Simonsen previously forecast a 4 percent jump in home sales this year compared to last. And any uptick would be welcome news to real estate professionals after almost four years of slower sales activity.
But so far, the market is off to a slower-than-expected start, with no indication that things will pick up.
Mike Simonsen
“It’s overall been a little disappointing,” Simonsen said of the market so far this year.
At the end of last year, Simonsen told Inman he tracked three key data points that help to determine the health of the overall market. In an interview this week, Simonsen provided an update on those metrics.
Hires rate
This measure of the labor market looks at how employers are adding people to their payrolls. It’s thus a gauge of the broader economy that can signal whether consumers will be selling in one market and buying in another.
That’s why Simonsen said he watches the hires rate as an indicator of whether Americans are getting new jobs and therefore likely to buy, sell or both.
“That’s coming in worse than I was hoping,” Simonsen said. “That means things like relocation for a new job — there are fewer new jobs. That, as an indicator for pushing the housing market, is coming in weaker than I had hoped for, for the year.”
New listings
Another indicator of a potential uptick in activity is new home listings data, Simonsen said.
That, too, has come in “lighter than expected for the year.”
“Which is really one of the things that is leading to tighter inventory,” Simonsen said. “So overall, inventory is now only 4 percent more homes for sale than a year ago.”
Last year, that figure was 30 percent higher year-over-year, indicating that inventory growth is slower “and might go negative” this year, Simonsen said.
“One of the things I was looking for at the start of the year is if the new listings start to accelerate, that would have been more homes on the market,” he added. “That would have been more price pressure. And we haven’t seen that at all.”
Fluctuations in mortgage rates are also having an impact on the market, with buyers expecting more inventory when rates fall but sellers pulling back.
Pending home sales
Simonsen had predicted a 4 percent increase in home sales this year unless the stars aligned, rates fell, the economy boomed and the market saw a large jump in sales.
That hasn’t happened, he said. And like other economists, he is lowering his expectations for sales activity this year.
“Our forecast was for 4 percent home sales growth year-over-year. It’s been really coming in closer to 2 percent,” Simonsen said. “So underperforming on that side, but growing with the exception of the two big storm weeks, end of January, early February, half the country was shut down.”
The Iran War — and its effect on interest rates and inflation — also tempered sales activity.
“In aggregate,” Simonsen said, “we’re only up a couple percent in terms of those weekly pending numbers from last year. Although this most recent week was pretty strong, so we’re going to look next week and see if we get a set.”
