What To Expect from the Housing Market in the Second Half of 2026

by David Torres

What To Expect from the Housing Market in the Second Half of 2026

By David Torres | Broker Associate at Real Broker

A lot of people in Lathrop started this year with the same hope.

Maybe mortgage rates would finally come down.
Maybe affordability would feel a little easier.
Maybe buyers and sellers would have a clearer path forward.

But the first half of 2026 tested everyone’s patience.

Mortgage rates stayed higher than many people wanted. Affordability remained tight. And uncertainty overseas added another layer of pressure that made the housing market feel even more unpredictable.

So if you have been sitting on the sidelines wondering whether to buy, sell, or wait, you are not alone.

The question many people are asking now is simple:

Will the second half of 2026 be any better for the housing market?

Nobody can predict the future perfectly. But there are a few encouraging signs that conditions could start moving in a better direction.

For buyers and sellers in Lathrop, CA and River Islands, here is what to watch.

Mortgage Rates Could Be Near a Turning Point

One of the biggest reasons the housing market has felt stuck is mortgage rates.

When rates stay elevated, buyers feel it immediately. Monthly payments become harder to manage, affordability tightens, and some buyers decide to pause their plans entirely.

That slowdown affects sellers too.

Fewer active buyers can mean fewer showings, longer days on market, more pricing sensitivity, and more pressure to position a home correctly from day one.

So why have mortgage rates stayed higher than people hoped?

One major factor is inflation.

Higher energy prices and uncertainty overseas have helped keep inflation elevated. And when inflation remains sticky, mortgage rates often have a harder time falling.

The encouraging news is that oil prices have already started coming back down.

That may not sound directly connected to buying or selling a home in Lathrop, but historically, mortgage rates and oil prices tend to move in the same direction.

Generally, when oil prices rise, inflation pressure can rise too. And when inflation pressure rises, mortgage rates may stay elevated. When oil prices ease, that can help inflation cool, which may eventually help mortgage rates come down.

a graph showing the price of a mortgage rate

Both mortgage rates and oil prices moved up in February when the overseas conflict began. There has been some volatility since then, but experts at the U.S. Energy Information Administration say oil prices are forecast to come down.

If oil prices continue trending lower, inflation cools, and global tensions ease, mortgage rates could also move lower in the second half of the year.

That would be meaningful.

Even a modest improvement in rates can change buyer affordability. It can bring some paused buyers back into the market. It can help more people feel confident making a move.

For a market like Lathrop, where buyers are often balancing payment, lifestyle, commute, and long-term plans, any rate relief could matter.

The first half of the year tested everyone’s patience.

The second half may finally start to reward it.

What Lower Mortgage Rates Could Mean for Lathrop Buyers

If mortgage rates ease, buyers in Lathrop and River Islands may feel a few changes.

Monthly payments could become more manageable.
Buying power could improve.
More homes may start to feel realistic.
Some buyers who paused earlier in the year may restart their search.

But there is another side to this.

If rates improve enough, more buyers may come back into the market at the same time.

That can increase competition, especially for well-priced homes in desirable areas.

In River Islands, that could matter because many buyers are drawn to newer homes, parks, trails, water-oriented lifestyle, school access, and the master-planned community feel.

If more buyers re-enter the market, the best-positioned homes may start getting more attention again.

That does not mean the market will suddenly become as competitive as it was during the peak years. But it does mean buyers should be careful about assuming they will have unlimited time or leverage if rates improve.

A better market can bring more opportunity.

It can also bring more competition.

Schedule a Homebuyer Consultation

Home Prices Could Pick Back Up

A lot of buyers are also hoping home prices will fall.

That is understandable. Affordability has been challenging, and lower prices would make the math easier.

But that is not what most forecasts are showing.

While price trends will vary by area, and some markets are seeing mild declines, experts still expect home prices to finish 2026 positive at the national level.

In fact, forecasts are calling for home prices to rise by an average of 2.3% in 2026.

a graph of blue rectangular objects

Right now, Federal Housing Finance Agency data shows prices are up about 1.7% nationally year-over-year.

The average forecast for all of 2026 is 2.3%.

That means, based on those projections, home price growth would need to pick up slightly in the second half of the year. Nothing dramatic. Just enough to finish the year around that projected 2.3% gain.

So why could that happen?

One reason is inventory.

The number of homes for sale has grown, but that growth may be starting to slow down. If inventory growth slows while rates improve and more buyers re-enter the market, that could put modest upward pressure on prices.

This is important for buyers.

Waiting does not automatically guarantee a lower price later.

If rates improve and buyer demand picks up, the same home could be more competitive in the second half of the year than it was earlier.

For sellers, this is more encouraging.

If you have been worried about your home’s value, the broader forecast still points to continued growth, just at a more normal and sustainable pace.

What This Means for River Islands Home Prices

In River Islands, price movement can depend on several local factors.

National forecasts are helpful, but local value is shaped by what buyers are actually comparing.

That includes:

resale inventory
new construction competition
builder incentives
lot location
floor plan
upgrades
school proximity
park or lake access
landscaping and backyard completion
solar structure
monthly payment sensitivity

A home in River Islands is not only competing against broad Lathrop market trends. It may also be competing against similar floor plans, builder releases, move-in-ready inventory, and buyer expectations for newer-home communities.

That means pricing still matters.

Even if national home prices are expected to rise, sellers cannot assume every home will sell at any price. Buyers are still selective. They still compare value. They still care about payment.

But if mortgage rates ease and buyer confidence improves, well-priced homes in desirable areas could benefit from renewed demand.

For buyers, the key is not to wait only because you assume prices will fall.

The better strategy is to watch what is happening locally and understand which homes are positioned well.

More Homes Are Expected To Sell

If the housing market has felt quieter lately, you are not imagining it.

Home sales have been slower than many experts expected.

That does not mean people have stopped wanting to move.

A lot of buyers and sellers still want or need a change. They have just been waiting for more certainty, better affordability, or a clearer idea of where the market is headed.

That kind of pent-up demand can build over time.

People still have life changes. Families grow. Kids move out. Jobs change. Retirements happen. Parents need support. Households need more space, less maintenance, or a different lifestyle.

Eventually, some of those people move even if the market is not perfect.

And if mortgage rates ease and confidence improves, more of that demand may start coming back.

Odeta Kushi, Deputy Chief Economist at First American, explains:

“Overall, we expect pent-up demand to continue emerging gradually. But the pace of recovery will vary significantly across markets and will depend on the path of rates, labor market conditions and inventory growth.”

That last part is important.

The recovery will not look exactly the same everywhere.

Some markets may see more momentum. Others may continue moving slowly. Local inventory, local jobs, buyer confidence, and affordability will all matter.

In Lathrop and River Islands, that means buyers and sellers should not rely only on national headlines. They need to understand what is happening in the local market.

The Second Half Would Need More Momentum

Based on the latest forecasts, for the housing market to hit the number of sales expected this year, the second half of 2026 would need to outperform the first half.

a graph of sales and statistics

In fact, each month for the rest of 2026 would need to come close to matching the best month we have had so far this year, which was May.

That is a sign experts are expecting more momentum in the second half of the year.

That does not mean every month will be easy.
It does not mean every buyer will jump back in.
It does not mean every seller will get the price they want.

But it does suggest the market may start moving more than it did earlier in the year.

For buyers who have been waiting, that could mean more competition if confidence improves.

For sellers who have been waiting, that could mean more buyer activity if conditions become more favorable.

Either way, the second half of the year could create more movement.

What Should Buyers and Sellers Expect from the Housing Market in the Second Half of 2026?

Buyers and sellers should expect the second half of 2026 to be better than the first half if mortgage rates ease, inflation cools, and buyer confidence improves. Experts expect home prices to continue rising at a modest pace nationally, with forecasts averaging 2.3% growth for 2026. Home sales are also expected to pick up, but the recovery will vary by local market. In Lathrop and River Islands, buyers and sellers should watch mortgage rates, inventory, buyer demand, and local pricing trends closely.

What Buyers in Lathrop Should Watch

If you are thinking about buying in Lathrop or River Islands, the second half of 2026 could bring more opportunity.

But opportunity does not mean you should move without a plan.

Watch these key factors:

mortgage rate movement
monthly payment affordability
available inventory
days on market
seller concessions
price reductions
new construction incentives
buyer competition
how quickly well-priced homes are moving

If rates improve, your buying power may improve too. But other buyers may feel the same way. That could create more activity around desirable homes.

The smartest move is to get clear before the market shifts.

Know your budget.
Know your payment comfort zone.
Know your must-haves.
Know which neighborhoods fit your life.
Know when it makes sense to act.

That way, if the right home becomes available, you are not trying to figure everything out under pressure.

What Sellers in Lathrop Should Watch

If you are thinking about selling in Lathrop or River Islands, the second half of the year may bring more buyer activity if rates ease.

That is good news.

But buyers are still careful.

A stronger second half does not mean sellers can ignore pricing, presentation, or strategy.

Buyers are still comparing homes. They are still watching payments. They are still noticing condition, updates, lot location, and value.

If more buyers come back into the market, the homes that benefit most will likely be the ones that are priced correctly and marketed well.

Sellers should pay attention to:

comparable sales
competing active listings
pending activity
pricing trends
showing activity
buyer feedback
price reductions nearby
new construction competition
timing and presentation

In River Islands, sellers should also understand how their home compares to nearby resale homes and builder inventory. If new construction incentives are strong, your resale strategy needs to account for that.

The good news is that if buyer activity improves, well-positioned listings may have a better chance to stand out.

The Second Half May Reward Prepared Buyers and Sellers

The second half of 2026 probably will not be perfect.

Mortgage rates may not fall as quickly as people want. Affordability may still be challenging. Some buyers may remain cautious. Some sellers may still need to adjust expectations.

But the second half could be better.

Mortgage rates may ease.
Home price growth may continue at a healthier pace.
Sales activity may pick up.
More buyers and sellers may finally decide to move.

For people in Lathrop and River Islands, the key is preparation.

If you wait until the market clearly improves, you may be moving at the same time as everyone else.

Buyers may face more competition.
Sellers may face more comparable listings.
Both sides may have to move faster.

The better approach is to understand your options now, so you can act with confidence if conditions improve.

Bottom Line

The second half of 2026 probably will not be perfect.

But it could be better.

Mortgage rates may ease if inflation cools and oil prices continue trending lower. Home prices are expected to continue rising at a more sustainable pace, with forecasts averaging 2.3% growth in 2026. And home sales may pick up if affordability improves and more pent-up demand enters the market.

If you have been waiting for signs of progress, this may be the shift to watch.

For buyers and sellers in Lathrop, CA and River Islands, the smartest move is not to rely on national headlines alone. It is to understand what these forecasts mean in our local market.

If you are thinking about buying, selling, or simply trying to decide whether the second half of the year creates a better opportunity, reach out. I can help you look at the local numbers, your goals, and what a realistic next move could look like.