High Mortgage Rates to Crush US Home Sales by 2027: Goldman Sachs
High mortgage rates are set to crush US home affordability, leading to anemic price growth and falling sales by 2027, warns Goldman Sachs.
The American dream of homeownership is facing a steep uphill battle. According to a sobering new report by Goldman Sachs Research, US home sales 2027 projections indicate a significant downturn as skyrocketing mortgage rates continue to erode affordability, despite a persistent shortage of available housing.
Anemic Growth and Falling Sales
In a detailed report titled ‘The Outlook for US Housing in 2027 amid Rising Mortgage Rates’, economists Ronnie Walker and David Mericle warn that the headwinds of affordability will soon dominate the market. The investment bank predicts that existing home sales will drop to 3.9 million in 2027, down from an estimated 4 million in 2026.
To put this in perspective, these figures remain a staggering 26 per cent below the levels seen in 2019. The impact isn't just on the volume of sales but also on the value of the properties.
The Slowdown of Price Growth
Goldman Sachs describes the expected pace of house price growth as "anemic." The projections show a steady decline in growth rates over the coming years:
- 2025: 1.2 per cent projected growth
- 2026: 1.1 per cent projected growth
- 2027: 0.8 per cent projected growth
The 'Lock-in' Effect: Why Homeowners Aren't Moving
A primary driver of this stagnation is the massive gap between old and new mortgage rates. As of October 22, 2026, the average rate on 30-year US mortgages climbed to 7.32 per cent. This has created a financial trap for current homeowners.
The data reveals a startling trend: more than 95 per cent of current mortgage borrowers hold interest rates below the prevailing market rates. Even more striking, 65 per cent of borrowers have rates that are at least two percentage points lower than today's offers.
"The combination of mortgage borrowers refinancing at low rates en masse in 2020 and 2021 and the high current level of mortgage rates has created a significant financial cost to moving," the economists noted.
Essentially, homeowners are reluctant to sell their current properties because upgrading or moving would mean trading a low-interest loan for a significantly more expensive one.
Impact on New Construction
The ripple effects of this affordability crisis are extending beyond existing homes and hitting the construction sector. Goldman Sachs projects that single-family housing starts will decline, falling from an estimated 900,000 in 2026 to 870,000 in 2027.
Is There a Light at the End of the Tunnel?
While the outlook remains grim, there is a glimmer of hope for the later part of 2027. The report suggests that mortgage rates may ease to approximately 6.4 per cent by then. This slight dip could potentially spark a gradual recovery in housing activity during the second half of the year.
However, the experts caution that this will not be a total fix. Even with a slight decrease in rates, affordability is expected to remain historically weak, leaving overall housing demand "tepid."