2026 Second quarter market update
The conflict in the Middle East continues to be a major driver of economic conditions, consumer sentiment, and expectations for future growth. One example is the University of Michigan Consumer Sentiment Survey, a widely followed measure of how consumers view their personal finances and the overall economy. After reaching a historic low of 44.8 in May, consumer sentiment rebounded to 49.5 in June. Much of that improvement appears tied to optimism surrounding the ceasefire agreement and the resulting decline in gasoline prices, which fell from a national average of $4.49 per gallon in mid-May to $3.83 by late June.
Although inflation remains above the Federal Reserve's 2% target, the economy continues to grow. June CPI (Consumer Price Index) rose 3.5% year-over-year, while core inflation, which excludes volatile food and energy prices, increased 2.6%. First-quarter GDP (Gross Domestic Product) expanded by 2.1%, and the latest Wall Street Journal survey of 72 economists’ projects full-year GDP growth of 2.2%. This same survey forecasts CPI to rise 3.4% and puts the probability of a recession at 25%, down from 33% in its first-quarter forecast. The economy, and the financial markets, continue to be fueled by investments in artificial intelligence.
After reaching a low of 6.23% in late April, mortgage rates spent most of the quarter near 6.5%. The consensus forecast calls for one additional Federal Reserve rate increase this year, with 30-year mortgage rates expected to end the year in the 6.5% to 6.7% range.
Santa Fe Housing Market
The Santa Fe housing market continues to reflect some price weakness, as both average and median home prices declined during the quarter. The median sales price fell 6% to $651,000, while the average sales price declined 7% to $852,000. Closed sales, however, increased 1%.
The decline in prices appears to reflect a shift in the mix of homes sold rather than broad-based market weakness. Sales of homes priced below $1 million increased 8.6%, while sales in the $1 million to $3 million segment declined 5.5%.
Inventory levels were up 1% from a year ago, while months of supply remained unchanged at 4.9 months. A balanced market is generally considered to have five to six months of inventory.
Inventory by price range currently stands at:
Under $1 million: 3.15 months of inventory
$1 million to $3 million: 7.1 months of inventory
$3 million to $5 million: 22 months of inventory
National Housing Market
Nationally, existing home sales ended the quarter at a seasonally adjusted annual rate of 4.09 million units, in line with 2025 levels. However, sales remain approximately 25% below the pre-pandemic level of 5.3 to 5.5 million annual sales.
The median sales price for an existing single-family home increased 1.8% year-over-year to $440,600. Regional performance continues to vary, with the Northeast and Midwest remaining the strongest markets, while the South, Southwest, and Mountain West continue to lag. In general, regions with the tightest housing supply have outperformed.