When will home sales finally return to normal?

The housing market remains 30% smaller than pre-pandemic levels, with home sales stuck around 4 million annually, below the 15-year average of 5 million. High mortgage rates cause a "lock-in effect," preventing about 870,000 potential sales in 2026. This effect slowly diminishes as older low-rate mortgages expire. Even if rates stay high, gradual sales growth is expected, accelerating if rates drop toward 5%. Normal sales levels may return in the coming years.