Will U.S. existing home sales reach 4.5M SAAR in any month by December 2026?

January 2026 existing home sales fell to 3.91M SAAR — a 15% gap to the 4.5M threshold. Even the December 2025 surge to 4.35M (highest in ~3 years) fell 3.4% short. Mortgage rates at ~6.0% are well above the ~5.5% threshold the committee analysis identifies as necessary for housing turnover recovery. The lock-in effect remains powerful with ~60% of mortgages below 4%. The question only requires one month above 4.5M across 10 remaining months, which provides multiple seasonal chances (spring/summer typically strongest). However, without a meaningful rate decline below 5.5%, the structural constraints persist. A surprise Fed pivot or economic shock could shift rates, but the FOMC is expected to hold at 3.50-3.75% and rates are forecast at 5.9-6.3% through spring.

The trajectory is moving in the wrong direction — January's 3.91M was the lowest since December 2023, reversing the December 2025 uptick to 4.35M. Management explicitly states 'we have not yet seen a catalyst for an inflection in housing activity' and FY2026 guidance excludes housing recovery. The committee analysis identifies housing recovery as requiring mortgage rates below 5.5%, but current rates hover at 6.0% with forecasts suggesting low-6% range through Q2 2026. Even optimistic rate scenarios (5.75% floor per experts) remain above the recovery threshold. The December 2025 surge to 4.35M appears to have been a pull-forward effect rather than a trend, given January's sharp reversal. To reach 4.5M would require either a dramatic rate decline or a spring/summer seasonal surge 3.4% above the recent cyclical peak — a tail probability scenario.

While the base case is clearly bearish (rates too high, January data weak), I weight the tail probability higher than my co-panelists for several reasons: (1) The question spans 10 months — a lot can happen in macro policy; (2) December 2025 reached 4.35M, proving the market can spike near the threshold on favorable conditions; (3) The spring/summer selling season historically produces the highest monthly SAAR readings, and a strong seasonal print combined with even modest rate improvement could breach 4.5M; (4) The $50B pent-up demand (even discounted to $22B) creates latent energy that could release suddenly. However, the committee's unresolved debate about timing and the 'lock-in effect' concern are valid constraints. The confidence is LOW because the outcome depends heavily on macro variables (rates, Fed policy) outside the analysis scope.

The math is straightforward: 3.91M to 4.5M requires a 15% increase in a single month's SAAR reading. The best month in the last three years was December 2025 at 4.35M — still 3.4% short. Mortgage rates at 6.0% are 50bps above the committee's identified recovery threshold of 5.5%. Rate forecasts show no path to sub-5.5% through at least mid-2026. The lock-in effect is structural, not cyclical — it doesn't resolve with moderate rate declines. Spring seasonality could push numbers higher but would need to exceed the December spike while mortgage rates are higher than optimal. Probability is low but not negligible given the 10-month window and the binary nature of the question (only needs one month).

I'm more confident than most that this resolves NO. The data trajectory is clear: existing home sales have been range-bound between 3.8M-4.4M SAAR for over two years. The December 2025 print of 4.35M was immediately followed by a crash to 3.91M in January — the market cannot sustain even 4.3M+, let alone reach 4.5M. Mortgage rates at 6.0% are not merely 'elevated' — they represent a structural barrier. The FOMC at 3.50-3.75% with expected holds means the 10-year Treasury (which drives mortgage rates) won't move enough to bring rates to 5.5%. Management's consistent messaging of 'no catalyst' across 4 quarters of earnings calls reflects genuine market assessment, not sandbagging.

The committee analysis correctly identifies housing recovery as the 'universal solvent' for HD, and the question tests whether this catalyst materializes. Current data says probably not — 3.91M is far from 4.5M and rates aren't declining fast enough. But I assign slightly higher probability than pure fundamentals suggest because: (1) NAR itself forecasts home sales to jump 14% in 2026 (bringing the annualized figure toward 4.5M territory from a low base); (2) seasonal patterns mean spring/summer months reliably outperform January; (3) a geopolitical shock or recession scare could crash Treasury yields and mortgage rates quickly. The question is binary and needs just one month — a single favorable data print in an otherwise frozen market. I weight this as roughly 1-in-4 odds.

January 2026 SAAR at 3.91M is 15% below 4.5M threshold. Rates at 6% are above the 5.5% recovery level. Management sees no catalyst. December's 4.35M spike reversed immediately. Low probability but 10 months provides multiple chances.

The housing market is frozen. Lock-in effect keeps sellers off market. Rates need to drop ~100bps to unlock recovery. No FOMC rate path gets mortgage rates to 5.5% in 2026. Even December's best reading in 3 years missed threshold by 3.4%. Strong NO lean.

Base case is clearly NO, but tail risks exist: surprise economic weakness could crash Treasury yields and mortgage rates rapidly. Spring selling season naturally boosts SAAR. Question needs only one month. NAR forecasts 14% sales increase for 2026. Low confidence because macro shocks could change picture quickly.