After years of turbulence driven by pandemic-era demand, surging prices, and elevated mortgage rates, the U.S. housing market is expected to move into a calmer and more balanced phase in 2026, according to Zillow’s latest housing market predictions. Rather than another boom or bust, Zillow forecasts a year defined by modest price growth, improved affordability, and a gradual return of buyers and sellers who have remained on the sidelines.

This shift represents a meaningful change from the highly competitive, fast-moving markets of recent years and signals a housing landscape where patience, negotiation, and local market knowledge matter more than urgency.

Home Prices: Modest Growth, Not a Surge

Zillow expects U.S. home values to rise about 1.2% in 2026, a pace that reflects stability rather than rapid appreciation. After price growth slowed significantly in 2025, this slight increase suggests that prices are finding a more sustainable level.

Importantly, this forecast highlights that price performance will vary widely by market:

• The number of major metro areas expected to experience annual price declines is projected to fall by roughly half, from about 24 markets in 2025 to around 12 in 2026.
  
  
• Many markets that struggled with price softening are expected to stabilize or return to modest growth.
  
  
• Stronger job markets and areas with limited supply may outperform the national average, while affordability-strained regions could lag.

Overall, Zillow’s outlook suggests that buyers are unlikely to see dramatic price drops nationwide, but sellers should also temper expectations of fast appreciation.

Mortgage Rates: Still High, But More Predictable

Mortgage rates remain one of the biggest challenges for housing affordability, and Zillow does not expect dramatic relief in 2026. The forecast anticipates that 30-year mortgage rates will remain above 6%, though with less volatility than in recent years.

This stability matters:

• Buyers can plan more confidently without fearing sudden rate spikes.
  
  
• Sellers may see more consistent demand as rates become “the new normal.”
  
  
• Refinancing activity is likely to remain limited unless rates dip meaningfully.

While rates at these levels are still elevated compared to the ultra-low period of the early 2020s, Zillow notes that stability itself can help bring hesitant buyers back into the market.

Home Sales Expected to Rise Gradually

Zillow forecasts that existing-home sales will increase in 2026, rising about 4.3% year over year to roughly 4.26 million sales nationwide. This would mark a noticeable improvement after several years of suppressed activity caused by affordability constraints and the so-called “lock-in effect,” where homeowners hesitate to sell because they hold low mortgage rates.

This increase won’t signal a return to pre-pandemic levels, but it does indicate:

• More homeowners may decide that moving is worth giving up a lower rate.
  
  
• Buyers who delayed purchases may re-enter the market as conditions normalize.
  
  
• Overall transaction activity should feel healthier and more balanced.

In short, Zillow expects 2026 to feel less frozen and more functional than recent years.

Inventory and Seller Behavior: Slowly Improving

Inventory has been one of the housing market’s biggest pain points, and Zillow expects gradual improvement in 2026 rather than a sudden flood of listings.

Key trends include:

• Sellers are becoming more willing to list as price expectations stabilize.
  
  
• Reduced urgency to “time the market,” leading to more organic listing activity.
  
  
• Continued supply constraints in high-demand areas, particularly those with limited new construction.

Zillow emphasizes that inventory gains will help improve affordability and choice, even if overall supply remains below historical norms.

Rental Market: Relief for Many Renters

Rent growth is expected to cool significantly in 2026. Zillow projects that apartment rents will rise just 0.3% nationally, reflecting a surge in multifamily construction that has eased pressure in many rental markets.

However, the rental outlook is not uniform:

• High-demand urban markets with tight supply may still experience faster rent growth.
  
  
• Single-family rentals are expected to see stronger demand as potential buyers continue renting longer.
  
  
• Renters may have more leverage in many markets, including better pricing and concessions.

Overall, Zillow views 2026 as a year when renters finally see meaningful relief after years of sharp increases.

New Construction and Builder Incentives

Zillow expects new home construction to slow in 2026, largely because a significant number of homes are already in the construction pipeline and because high financing and labor costs continue to weigh on builders.

To maintain demand, builders are likely to:

• Offer mortgage rate buydowns and financial incentives
  
  
• Focus on smaller, more affordable home designs
  
  
• Target buyers who are priced out of the resale market

These incentives could create pockets of opportunity for buyers willing to consider new construction.

Changing Buyer Preferences and Home Features

Zillow also points to evolving buyer priorities in 2026. Energy efficiency and long-term cost savings are becoming more important, with features like:

• EV charging capability
  
  
• Energy-efficient appliances
  
  
• Solar and battery systems

These features are increasingly seen not as luxury upgrades, but as practical necessities that help offset high housing costs over time.

Technology and AI in Real Estate

Another major theme in Zillow’s forecast is the growing role of artificial intelligence in real estate transactions. In 2026, AI is expected to play a larger role in:

• Matching buyers with homes and agents
  
  
• Streamlining communication and scheduling
  
  
• Improving pricing insights and market analysis

Zillow suggests these tools could reduce friction and make buying, selling, and renting more efficient for consumers.

What Zillow’s 2026 Forecast Ultimately Signals

Zillow’s predictions paint a picture of a housing market that is no longer overheated — but not weak either. Instead, 2026 is expected to be defined by:

• Modest price growth
  
  
• Steadier mortgage rates
  
  
• Improving sales activity
  
  
• Slower rent increases
  
  
• More balanced buyer-seller dynamics

Rather than dramatic headlines, Zillow sees 2026 as a year where the housing market becomes more predictable, navigable, and sustainable for everyday buyers, sellers, and renters.