Goldman Sachs Warns Elevated Mortgage Rates Will Freeze U.S. Housing Through 2027

The U.S. housing market faces prolonged stagnation as average 30-year mortgage rates surged to 7.40% by mid-October 2026, up from 6.27% a year earlier, according to Freddie Mac. Goldman Sachs expects the rate lock-in effect—which disincentivizes homeowners with low-rate pandemic mortgages from selling—to ease only gradually after 2027, projecting borrowing costs to moderate toward 6.4% by the end of 2027, compared with Fannie Mae's more pessimistic 7.5% call.
Rising borrowing costs have pushed home sales into a deep freeze across the nation:
• Existing-home sales slowed to an annual pace of 3.99 million units in September, marking the slowest sales pace of the year alongside August, according to the National Association of Realtors (NAR).
• Pending home sales tumbled 7.3% month-over-month to their lowest level since index tracking began in 2001, far exceeding the consensus forecast for a 0.5% drop.
• The median existing-home price edged up 1.3% year-over-year to $417,500, while seller concessions appeared in 44.7% of August transactions—the highest rate for that month since at least 2020.
The affordability squeeze has pushed the share of first-time homebuyers down to 21%, the lowest level recorded since 1981, according to NAR. The median age of first-time buyers has consequently risen to 40 years old, up from 32 in the early 2000s, widening the financial divide between established equity-rich owners and aspiring buyers facing rising monthly payments and climbing rents.