For months, the housing industry has been waiting for the comeback. The National Association of REALTORS® entered 2026 projecting that existing-home sales could surge roughly 14%, fueled by improving inventory, job growth and better affordability. That was the hopeful scenario. But as we move deeper into the year, the market is reminding everyone that recoveries are rarely clean. Mortgage rates remain elevated, consumer confidence is fragile, affordability is still stretched, and many would-be buyers continue to sit on the sidelines. The comeback may still be coming but it is arriving under some very dark clouds.
There is genuine progress on affordability. Redfin found that wages were rising about 4.1% year over year, while mortgage-payment growth had slowed dramatically and asking rents were rising at a slower pace. That matters because for years housing costs were racing ahead of incomes. But we should not confuse “getting less unaffordable” with “affordable.” In South Florida especially, home prices remain high relative to local incomes, insurance costs continue to punish monthly budgets, property taxes can shock buyers after a reassessment, and condo owners are dealing with rising association fees and reserve requirements. Buyers may have more leverage today, but many still cannot comfortably qualify for the homes they want.
Price stability is another encouraging sign but it comes with a warning. Zillow has projected roughly 1.2% annual home-value growth, which sounds like the soft landing everyone hoped for. Yet slow appreciation can feel very different depending on which side of the transaction you are on. Buyers may welcome it, but sellers who still believe their homes should command 2022 prices are being forced into reality. More listings are sitting longer. Price reductions are becoming common. Deals are falling apart over inspections, insurance, appraisals and financing. This is no longer the market where a seller could put almost anything on the MLS and expect multiple offers by Sunday night.
South Florida may be the clearest example of this new tension. Redfin recently classified Miami as one of the strongest buyer’s markets in the country, estimating that there were far more sellers than buyers in the market. A very high percentage of homes in Miami and West Palm Beach have also been selling below their original asking prices. That creates opportunity but it also sends a message to sellers: buyers are no longer desperate. They are comparison shopping. They are negotiating. They are walking away. And in certain condo-heavy areas, rising carrying costs are creating even more pressure. There is still enormous long-term demand for South Florida, but that does not mean every property is immune from repricing.
Then there is the biggest dark cloud of all: mortgage rates. Recent 30-year mortgage rates have moved back above 7%, and every move higher directly attacks purchasing power. A buyer who could afford a certain home at 6% may suddenly be priced out at 7%. That means the market remains extraordinarily sensitive to inflation data, Federal Reserve expectations, Treasury yields and the broader economy. If rates remain stubbornly high, sales could stay muted much longer than the industry hoped. If unemployment rises meaningfully or consumer confidence deteriorates, the recovery could be pushed even further out.
And that is why I believe the next few months will separate strong real estate professionals from everyone else. This is not a boom. It is not a crash either. It is a complicated, uneven and sometimes uncomfortable market where opportunity exists alongside real risk. Buyers have more leverage, but financing is expensive. Sellers still have substantial equity, but they may have to negotiate. Inventory is improving, but affordability remains difficult. The agents who succeed will be the ones willing to tell clients the truth: the clouds are still here, but that does not mean there is no opportunity beneath them. In fact, some of the best real estate opportunities often appear precisely when the market feels uncertain and everyone else is afraid to move.
