Goldman Sachs: U.S. Housing Market Likely to Remain Bleak

Goldman Sachs, a leading global financial institution and multinational investment bank, warns that housing market conditions are unlikely to change much just because the calendar turns from 2026 to 2027.

It said that high mortgage rates will keep homeownership out of reach for many Americans and, in turn, will weigh on the nation’s economy.

“In 2027, we expect the headwind from affordability — reignited by the recent rebound in mortgage rates — to increasingly dominate, weighing further on activity,” Goldman Sachs Analyst Ronnie Walker said. “Sustained higher mortgage rates will continue to have their most pronounced impact on housing turnover, and the recent run-up in rates is likely to push existing home sales lower in the coming months. More than 95% of mortgage borrowers have interest rates below current market rates, and 65% have rates 2 percentage points below market rates, strongly disincentivizing them from moving.”

Walker estimated existing home sales of just 3.9 million in 2027, 26% below 2019 levels and slightly below his 4 million estimate for 2026.

Tepid Housing Demand

“We expect housing demand to remain tepid,” Walker said.

Yahoo Finance noted that the housing affordability crisis likely will continue to weigh on young people looking to buy a home.

About nine in 10 adults younger than 40 say it’s harder for young adults today to buy a home than it was for their parents’ generation, according to a recent Pew Research Center survey.

Since 2019, home prices have risen faster than young adults’ incomes, according to Pew Research data.

Pew noted that between 2019 and 2024, the inflation-adjusted median home value rose 30%, while the inflation-adjusted median household income for households headed by those under 40 rose just 9%.

Housing experts think young people need to get more creative in the home-buying process if they ever want a piece of the American dream, Yahoo Finance reported.

Investing in Rehabilitation

“Well, one thing that’s going on within the housing market is you’re seeing — and this is also with the 21st Century housing bill that passed just several months ago — is you’re going into blighted areas and investing in the rehabilitation of those homes. And that’s actually a much cheaper way of owning a home than otherwise,” Meredith Whitney, CEO of Meredith Whitney Advisory Group, said on “Sozzi Unleashed,” a podcast hosted by Brian Sozzi, Yahoo Finance’s Executive Editor.

“Detroit’s the perfect example of this,” she said, “where you had an economic revival with blighted areas, with run-down areas and investment in those areas. You can get a home for a massive discount to what you would have in the more established areas. And these areas are also getting economic investment from corporations. And you’re seeing real revival.”