Will U.S. existing home sales decline more than 10% year-over-year in any month through September 2026?

The 'any month' criterion over 8 months (Feb-Sep 2026) provides multiple chances for a single bad reading. Historical precedent from 2022 shows sharp declines are possible even in undersupplied markets. However, the 2025 comparison base is already weak — existing home sales were recovering from 30-year lows. Declining >10% from already-depressed levels requires a significant negative shock (rate spike above 7.5%, recession, or tariff-induced freeze). The cumulative probability of at least one such shock month over 8 months is meaningful but not dominant given current stabilization trends.

Month-by-month comp analysis matters. If March 2025 was weak (tariff uncertainty noted), then March 2026 has an easy comp — less likely to decline 10%. The stabilization trend from 2024-2025 means 2025 volumes were slightly higher than 2024, making 2026 comparisons somewhat harder than 2024 vs 2023. But 'somewhat harder' is far from 10%. If any month in late-2025 saw a temporary volume spike (e.g., from brief rate dip), that month's 2026 YoY comp would be harder. Still, >10% decline requires a significant macro deterioration, not just tighter comps.

Macro tail risks deserve meaningful weight: tariff uncertainty (demonstrated real impact in Q1 2025), potential recession from policy tightening, mortgage rate spike above 7.5% on inflation concerns. These are plausible if not base-case scenarios. The lock-in effect means existing home sales have a structural floor — people who must sell (death, divorce, relocation) still transact. But the SAAR methodology can amplify seasonal anomalies, and a single bad month of data over 8 reporting periods is the question. Upside for NO: Fed could cut rates, boosting volume. The tail-risk probability accumulated over 8 months justifies a somewhat elevated estimate.

The 2025 comparison base is the dominant factor. NAR reported existing home sales recovering somewhat in 2025, meaning the base is slightly higher than the 2023-2024 trough. A higher 2025 base makes >10% decline marginally more possible than declining from the absolute trough. However, 'recovering somewhat' from 30-year lows still means the base is historically low in absolute terms. Mortgage rates would need to be significantly worse than 2025 levels to drive >10% volume decline. With rates currently elevated but not dramatically worse than 2025, the base case is NO for most individual months.

Lock-in effect analysis: the lock-in effect suppresses SUPPLY of existing homes (owners trapped in low-rate mortgages) but also suppresses TRANSACTIONS (fewer listings means fewer sales). This creates both a structural floor and a structural ceiling on volume. In 2025, sales were already near this structural floor. To decline >10% from a floor requires a shock that overwhelms the structural constraint — essentially forcing volume below the irreducible minimum of necessity-driven transactions. While the structural undersupply argument is often cited for prices, it applies equally to volume floors. Breaching 10% decline from near-floor levels is a low-probability event.

Specific trigger scenarios for >10% single-month decline: (1) Mortgage rate spike to 8%+ on inflation scare — possible if tariff-driven inflation materializes; (2) Recession causing job losses — unemployment rising directly suppresses home buying; (3) Tariff-induced economic freeze — similar to March 2025 effect but more severe; (4) Financial market dislocation reducing consumer confidence. Any of these could cause one bad month. Over 8 months, the cumulative probability of at least one such shock is non-trivial. However, the 2025 base being already weak provides a significant buffer. The 'any month' criterion is the main reason this is not lower.

With 2025 as an already-weak base year, >10% decline requires either a significant macro shock or a mortgage rate spike well above current levels. Eight months provides multiple chances for such a shock, but the structural undersupply and low-inventory environment provides a floor on transaction volume. Housing market stabilization trend argues against sharp declines. Probability modestly below base rates for macro shock events over this timeframe.

SAAR data can be volatile month-to-month due to seasonal adjustment methodology. A single month of SAAR existing home sales can swing sharply based on timing of closings, weather effects, and seasonal adjustment quirks. This statistical noise increases the chance of breaching 10% YoY in any single month even without a fundamental shift in housing demand. The SAAR calculation amplifies seasonal anomalies, and over 8 months, one bad data print is more likely than many expect. This statistical noise factor is underweighted in purely fundamental analyses.

Easy comparables from weak 2025 are the strongest argument for NO. Structural undersupply and historically low inventory support a volume floor. But mortgage rates above 7% remain a persistent headwind, and any incremental deterioration from current levels could push one month over the threshold when combined with SAAR volatility. The 'any month' criterion over 8 months is the key risk factor for the NO side. On balance, the easy comps and structural factors outweigh the tail risks, but not by a huge margin.