By MIAMI REALTORS Chief Economist Gay Cororaton
Key Takeaways
- Geopolitical tensions that have pushed oil prices to over $100/barrel could push inflation to an average of 3.7% and the 30-year mortgage rate to an average of 6.8% in 2026.
- Rising mortgage rates will set back the housing market recovery to 2027. Million-dollar buyers who are less impacted by higher mortgage rates will continue to outperform the overall market.
- Rising mortgage rates will also favor affordable markets where prices are typically below $500,000, a price point affordable for the typical household.
The depth and breadth of the economic impact of the geopolitical tension in the Middle East following the assassination of Iranian Supreme Leader Ali Khamenei last February 28, 2026 remains highly volatile and uncertain with the conflict still at its early stage.1 However, rising crude oil prices will likely push up inflation and interest rates and lower economic growth, setting back the housing recovery to 2027.
The Miami Association of Realtors® (MIAMI) March 2026 Outlook update is based on a scenario that crude oil prices will average at $101/barrel in 2026.
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Given the oil price scenario, inflation will accelerate to an average of 3.7% in 2026. MIAMI Realtors® forecasts that inflation will spike beginning in March to 3.5% in April and hit the 4% mark from May through October as oil prices hit $100 to $120 dollars from May through October 2026.
The 30-year fixed mortgage rate will climb to an average of 6.8% in 2026 and hit 7% mid-year before edging down to 6.5% by year-end. Financial markets are currently pricing in just one Fed rate cut, most likely in September 2026. MIAMI forecasts that the 30-year mortgage rate will remain elevated at an average of 6.4% in 2027.
With mortgage rates projected to remain elevated at 6.8% in 2026 (vs. 6.0% in the December 2025 Outlook Update), MIAMI Realtors® expects the housing recovery to be pushed back in 2027, with sales declining 3% in 2026 and rebounding to 0.8% in 2027.
While overall sales are poised to decline, MIAMI Realtors® expects the million-dollar segment to continue to outperform the overall market, sustaining the trend since 2023 when mortgage rates started rising.13 A more volatile stock market could spur increased investments in the South Florida luxury real estate market as family offices and high net worth investors diversify their portfolios and shift away from riskier assets.
Cities that tend to attract a wealthier demographic with a higher share of cash sales (as of January 2026) will likely outperform the overall market in 2026: Miami (59%), Coral Gables (63%), Miami Beach (61%), Pinecrest (60%), Southwest Ranches (56%), Palm Beach Gardens (57%), West Palm Beach (82%), Palm Beach (78%), Jupiter (52%), Tequesta (80%), and Hobe Sound (64%).
Geographic areas where the typical home is in the $400,000 to $500,000 range will tend to attract homebuyers as mortgage rates rise in 2026. Access to efficient public transportation and availability of good schools will further bolster the attractiveness (or unattractiveness if otherwise) of these affordable markets:
Miami-Dade County: Miami-Gardens, Homestead, West Little River
Broward County: Sunrise, Tamarac, North Lauderdale, Oakland Park, Lauderhill, Margate, West Park, Lauderdale Lakes, Washington Park
Palm Beach County: Boynton Beach, Greenacres, Lake Worth, Riviera Beach
Martin County: Jensen Beach, Port Salerno
St. Lucie County: Port St. Lucie, Fort Pierce, Lakewood Park, River Park, Hutchinson Island South
