BRIEFINGS FROM GOLDMAN SACHS
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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 39 institutional desks. No promotion.
Lead — The desk anticipates continued sluggishness in the US housing market, driven by affordability constraints expected to peak by 2027. Following insights from Goldman Sachs Research, existing home sales are set to decline, with significant ramifications not only for the housing sector but also for broader economic indicators. The anticipated 3.9 million existing home sales in 2027 represent a stark 26% drop from pre-pandemic levels in 2019, underscoring the housing market’s struggles as rising mortgage rates overshadow supply shortages. This economic landscape could influence currency valuations as traders monitor shifts influenced by housing dynamics.
The thesis posits that the US housing market faces severe headwinds, primarily due to rising mortgage rates which outweigh the persistent shortage of housing supply. Per the full note from Goldman Sachs, this situation is expected to culminate in lower sales and minimal price growth by 2027.
Goldman Sachs forecasts existing home sales will total 3.9 million in 2027, a figure that falls short of their 2026 prediction of 4 million and significantly below the 5.3 million homes sold in 2019. Additionally, projected price growth is stunted, creeping up by only 0.8%—a stark contrast to historical norms.
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How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should look for the upcoming 3.9 million forecast for home sales in 2027 as a critical indicator of economic sentiment in the USD landscape. Further, any developments related to mortgage rate movements will be crucial to watch as they might sway the current forecasts.
Risks to this view
Should mortgage rates stabilize or decline significantly, or if economic policies support a resurgence in housing demand, this could change the trajectory of home sales and prices, potentially invalidating the current bearish outlook.
The risks to global economic growth .keep-white { color:#ffffff !important; } .keep-black { color:#000000 !important; } .gsFooterGrey * { color:#000000 !important; } ul.gsFlushList li { text-indent:-1em !important; margin:0 0 0 25px !important; } table { border-collapse:collapse; border-spacing:0; } img { height:auto !important; } .gsContentWidth { width:640px !important; } Briefings Newsletter ( ) Briefings Newsletter ( ) The key insights ( ) today: ▪ US home price growth is expected to slow in 2027 as affordability pressures deepen, according to Goldman Sachs Research. ▪ Chief Economist Jan Hatzius outlines the main downside risks to global economic growth in 2027. ▪ Defense investments are broadening out as technological sovereignty, economic resilience, and supply chains become security priorities, according to the Goldman Sachs Global Institute. ▪ Briefings Brainteaser: How many sports teams globally are worth more than $2 billion today? Want to sign up and stay connected? Click here ( ).
The Outlook for US Housing in 2027 ( ) Rising mortgage rates are likely to outweigh a longstanding housing shortage in the US next year, leading to a drop in both the sales of existing homes and the construction of new ones, according to Goldman Sachs Research ( ) . Beyond next year, Goldman Sachs Research expects existing home sales to gradually edge higher, reflecting the natural decay of the lock-in effect that comes from, for example, borrowers paying down their mortgages. “In 2027, we expect the headwind from affordability to increasingly dominate, weighing further on activity,” economists Ronnie Walker and David Mericle write in a report. They expect existing home sales to total just 3.9 million in 2027, modestly below their forecast of 4 million for 2026 but 26% below 2019 levels.
Against the backdrop of slower home sales, they forecast another year of “anemic” home price growth: 0.8% December-over-December in 2027 after 1.1% this year and 1.2% in 2025. This year’s jump in mortgage rates—in response to the war in Iran, higher oil prices, and the prospect of hikes by the Federal Reserve—has reduced incentives for homeowners to sell. More than 95% of mortgage borrowers have interest rates below current market rates, creating a “lock-in” effect that is slowing sales. ( ) Rates for 30-year mortgages in the US have climbed to 7.32% (as of October 22).
Goldman Sachs Research’s credit strategists expect mortgage rates to decline in 2027 but remain elevated at 6.4%. Even if that decline is realized, affordability will remain at historically poor levels. Read the full article ( ) on Goldman Sachs Research’s outlook for US house prices, homebuilding, and interest rates.
The Risks to Global Economic Growth Global economic growth in 2027 is projected to continue on a similar trajectory to that of 2026 as lower energy prices offset the fading boosts from fiscal policy and AI, according to Jan Hatzius ( ) , Goldman Sachs Research's chief economist. “But the balance of risks is on the downside,” he adds. Goldman Sachs Research forecasts annual real global economic growth of 2.7% in both 2026 and 2027. The most immediate concern is that energy prices have again climbed sharply on fears of renewed Middle East escalation, Hatzius writes in a report.
This is likely to have negative effects on consumers and energy-importing economies more broadly. Higher bond yields are also likely to weigh on global growth. Large-scale deficits coupled with AI-linked borrowing and central bank hikes have started to show up more clearly in higher longer-term interest rates, Hatzius writes.
If the increase in interest rates is sustained, our economists estimate that it will subtract a cumulative 0.6% from global GDP via weakness in housing, consumer durables, and business investment. But Goldman Sachs Research expects bond yields to pull back as central banks deliver fewer hikes than markets are pricing. “Our strongest global view is that central banks will deliver fewer hikes than currently priced,” Hatzius writes. “Although AI investment is still rising rapidly, we expect the increase as a share of GDP to slow over the next year,” Hatzius writes. This is likely to weigh on both capital spending growth and consumer spending, which has received an AI-related boost worth an estimated 0.25% of GDP over the last year. “Our own base case remains that AI investment will ultimately pay off in terms of higher productivity and economywide profits,” Hatzius writes.
Read Hatzius’ full report ( ) on his outlook for global growth, central banks, and AI. How Changing Defense Priorities Are Impacting Markets and Industry Governments are moving defense back to the center of economic and industrial strategy, reshaping where capital flows, according to a new white paper ( ) by the Goldman Sachs Global Institute. “This shift is about more than just increased military spending,” the paper says. The focus on security is also lifting other segments of the industrial economy, such as advanced manufacturing and energy technology.
A NATO spending target of 5% of GDP, set last year, includes 1.5% for investments to protect critical infrastructure, defend networks, and strengthen the defense industrial base. * Cross-border partnerships are helping expand defense production. These include joint development, where nations pool expertise and industrial capacity, and joint ventures between start-ups and established contractors. * Efforts to achieve greater resilience are spurring domestic reindustrialization. In Germany, 50% of defense orders since 2022 have gone to German companies and another 35% to German-foreign partnerships, according to Goldman Sachs Research. “This doesn’t mean that countries will no longer purchase foreign equipment,” the white paper says.
Instead, they are seeking deeper relationships with partners to facilitate technology transfer or strengthen domestic industrial capabilities. ( ) * Defense stocks have fluctuated recently amid uncertainty about US spending plans, but over the long term, stock markets have risen with defense investments. European defense companies are reducing their historical discount against American peers, with some turning to M&A as they look for ways to scale. Read the full white paper ( ) for more on how new technologies and funding models are changing global defense investment.
Briefings Brainteaser: Playoffs The global sports market is expanding rapidly, fueled by institutional funding and growing media rights valuations, according to a new report from Goldman Sachs Private Wealth Management. As recently as 2010, no sports teams were worth $2 billion. How many teams globally are worth that much today?
A) 20-50 B) 51-75 C) 76-100 D) More than 100 Check the answer here. ( ) Goldman Sachs in the News By clicking on these links, you will be redirected to external websites that Goldman Sachs does not own or operate. Goldman Sachs is not responsible for the products, services, or content provided on those sites. Please refer to each external website's terms, privacy, and security policies for details.
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