The Outlook for US Housing in 2027 amid Rising Mortgage Rates

US housing affordability constraints are expected to outweigh the longstanding housing shortage in 2027, depressing sales, construction and prices before activity recovers as mortgage rates decline.

• Existing home sales are forecast at 3.9 million in 2027, versus 4 million in 2026 and 26% below 2019 levels.
• Home-price growth is projected at 0.8% December-over-December in 2027, following 1.1% in 2026 and 1.2% in 2025.
• Thirty-year mortgage rates reached 7.32% on October 22, while Goldman Sachs expects them to fall to 6.4% in 2027; affordability would nevertheless remain historically weak.
• More than 95% of mortgage borrowers have rates below current market levels, including 65% with rates at least two percentage points lower, creating a lock-in effect that suppresses moves and sales.
• Residential fixed investment is expected to contract at annualized rates of 2.5%, 4% and 1% over the next three quarters after a 3.1% increase in the third quarter, then recover at a 1–2% pace from the second half of 2027; single-family starts are forecast to fall from 0.90 million in 2026 to 0.87 million in 2027.

Takeaway: Investors should expect weak US housing activity and construction through early 2027, with a potential recovery in the second half if mortgage rates decline; unchanged rates would reduce the residential fixed-investment growth forecasts by one to two percentage points through the end of 2027.