For much of the past year, buyers and sellers have been watching for clearer direction in the housing market. While higher mortgage rates were expected to slow demand, the latest data shows a more balanced outcome—buyers remain active, pending sales are ahead of last year, and inventory growth has started to stabilize.
Mortgage rates continue to be a key driver of housing activity in 2026, shaping demand, supply, and pricing trends. Despite higher borrowing costs, buyer activity remains resilient and home prices are relatively stable. This update breaks down what rising rates mean for demand, inventory, and pricing moving into the second half of 2026.
Are Rising Mortgage Rates Slowing Down Homebuyer Demand?
Data shows homebuyer demand is still holding up despite higher borrowing costs. Pending home sales are averaging 10% above last year, with 93,000 contracts signed this week alone. While mortgage rates reached 6.6%, buyers are still responding when pricing and inventory conditions feel favorable.
One of the biggest surprises this spring has been how active buyers remain. Rates are higher than earlier this year, but they are still below where they were during the same period in 2025. According to the Associated Press, the average U.S. 30-year mortgage rate recently climbed to 6.51%, still below the 6.86% average seen a year ago. That added stability is helping buyers move forward with more confidence. In many Silicon Valley neighborhoods, well-priced homes are still attracting strong attention, especially where inventory remains limited.
Is Housing Inventory Still Increasing in 2026?
No, national inventory growth has largely flattened. There are just over 1 million homes on the market, almost unchanged from last year. California and Florida now have tighter inventory than a year ago, while most markets across the country are no longer seeing meaningful supply growth.
This marks a major shift from last year when inventory was rising much faster. HousingWire recently reported that national inventory growth has slowed from 33% year over year in mid-2025 to roughly 10% in early 2026, reflecting a more balanced market environment. New listings are still coming onto the market, but homes are also selling more quickly than they were a few months ago.
Pro Tip: If you are waiting for both lower mortgage rates and significantly more inventory at the same time, current market trends suggest that may be difficult to find.
Are Home Prices Going Up or Down Right Now?
Data suggests home prices are mostly stable in 2026. Median list prices are running 3% below last year, while pending sale prices are still coming in about 2% higher year over year. The market is showing slower pricing movement rather than sharp appreciation or major declines.
Sellers are becoming more price-conscious, while buyers are still competing for well-prepared homes in desirable locations. Overall, the data continues to point toward a more balanced housing market moving into the second half of the year.
What This Means Moving Forward
The latest housing data continues to show a more balanced market in 2026. While mortgage rates remain elevated, buyer demand is still holding up, inventory growth has slowed, and home prices are staying relatively stable across many markets.
If you are thinking about buying or selling in Silicon Valley, I’d be happy to help you understand what these trends could mean for your goals and timing in today’s market.
FAQs:
Q: How do mortgage rates affect affordability in 2026?
A: Higher mortgage rates increase monthly payments, reducing how much buyers can afford, especially in high-priced markets like Silicon Valley.
Q: Why isn’t housing inventory increasing?
A: Inventory stays flat because homes are selling almost as fast as new listings come on the market, keeping supply balanced.
Q: What homes are selling fastest?
A: Move-in-ready, well-priced homes in desirable locations continue to attract the strongest buyer demand.