The housing market receives a cool signal. Norges Bank significantly lowers forecasts

The new data comes from Monetary Policy Report 1/2026, published on March 26. Norges Bank is revising its previous estimates. The changes also include expectations regarding interest rates and housing investments. The decisions are being made amid heightened economic uncertainty.

Norges Bank forecasts a 4 percent increase in housing prices in 2026. This is a decrease of 2.3 percentage points compared to the December report. In 2027, growth is expected to be 6.1 percent, which is 1.3 percentage points less than previously forecast.

The forecast for 2028 has been raised to 7.1 percent, an increase of 0.8 percentage points. In 2029, prices are expected to rise by 6.1 percent. For comparison, growth in 2025 is estimated at 5.9 percent, a revision of 0.1 percentage points.

Norges Bank expects an increase in mortgage interest rates. The rate is expected to rise from 5.1 percent in the first quarter of this year to 5.4 percent a year later. A gradual decline is then forecast from the end of the year.

At the same time, forecasts for housing investments have been lowered. Growth is expected, but it will be weaker than previously assumed. The level in 2029 is expected to be lower than at the beginning of 2022. Higher interest rates are expected to limit investment activity.

On March 26, Norges Bank kept the reference rate at 4 percent, a level in place since September 2025. At the same time, it signals the possibility of a rate hike at one of the upcoming meetings. Previously, potential cuts in 2026 had been indicated. The decisions are also influenced by uncertainty related to the international situation, including the conflict in the Middle East, which affects the interest rate path and economic forecasts.