Seven Data-Based Takeaways from Zillow’s 2026 Housing Forecast

Based on Zillow research published December 23, 2025

After a largely flat 2025, the U.S. housing market is expected to move into a more stable phase in 2026. According to forecasts from Zillow, the coming year is likely to be defined by modest price growth, fewer declining markets, improving affordability, and a gradual increase in transaction activity.

Below are seven key takeaways from Zillow’s 2026 housing market predictions, with a focus on measurable trends rather than speculation.

1. Home prices are expected to rise modestly

Zillow forecasts U.S. home values will increase 1.2% in 2026, following an essentially flat 2025. This projection reflects expectations of slightly improving affordability paired with steady buyer demand.

Mortgage costs have already eased from prior peaks, which may:

• Help more buyers remain active in the market
• Support slow, incremental price growth rather than sharp swings

Zillow Senior Economist Kara Ng notes that 2026 is expected to offer more stability than recent years, particularly compared to the volatility seen earlier in the decade.

2. Fewer major markets are projected to see price declines

In 2025, home values declined in 24 of the 50 largest U.S. markets. Zillow expects that number to fall to 12 markets in 2026.

This shift suggests:

• Greater price stability across most large metros
• Fewer homeowners facing paper losses relative to prior years
• A broader return to equity accumulation

While local conditions will still vary, the national trend points toward fewer widespread value declines.

3. Existing home sales are projected to increase

Zillow forecasts 4.26 million existing home sales in 2026, representing a 4.3% increase over 2025.

Contributing factors include:

• Several years of constrained inventory and elevated rates creating pent-up demand
• Gradual affordability improvements bringing sidelined buyers back into the market

Recent data supports this direction: new listings and pending sales rose about 5% year over year in October, outperforming typical seasonal patterns.

4. Mortgage rates are expected to remain near 6%

While forecasting mortgage rates far in advance is inherently uncertain, Zillow’s outlook suggests rates are likely to hover near the 6% range in 2026, rather than return to the historically low levels seen earlier in the decade.

Key factors influencing this outlook include:

• Housing costs accounting for roughly 40% of the Consumer Price Index (CPI)
• Zillow’s shelter forecast calling for slower, but still positive, housing inflation

Rates have already dipped toward — and in some cases slightly below — 6%, contributing to improved affordability. Zillow reports affordability reached a three-year high in late 2025, coinciding with increased listing activity and stronger buyer engagement.

5. Rent growth is expected to remain minimal

Zillow projects multifamily rents will rise just 0.3% in 2026, signaling improving rent affordability.

This environment supports the continued growth of renters by choice rather than necessity, particularly among households prioritizing flexibility and predictable monthly costs.

6. New construction is expected to slow, with incentives playing a larger role

Single-family housing starts are projected to reach their slowest pace since 2019 in 2026, following a weak 2025.

Builders are scaling back because:

• A significant supply of completed or nearly completed homes already exists
• The focus has shifted to selling current inventory rather than starting new projects

Single-family starts are already tracking about 5% below last year’s pace, and builders are expected to continue using incentives such as:

• Mortgage rate buydowns
• Closing cost assistance

These incentives are likely to remain an important factor for buyers comparing new construction to resale homes.

7. Lifestyle renting is becoming more common

Zillow data indicates that renting by choice is becoming more prevalent:

• Nearly 60% of renters plan to continue renting in 2026
• Only 37% say they would buy if mortgage rates declined, down from 45% the prior year

Rising ownership costs contribute to this trend. Nationally, the “hidden” costs of owning — including maintenance, insurance, and property taxes — now average nearly $16,000 per year.

This shift highlights a growing segment of renters focused on mobility, amenities, and cost predictability rather than rapid homeownership.

Summary: What Zillow’s 2026 forecast shows

Taken together, Zillow’s projections point to a housing market characterized by:

• Modest national price growth
• Fewer declining markets
• Rates stabilizing near recent levels
• Gradually increasing sales activity
• Stable rental conditions

Rather than a boom or a correction, 2026 is expected to reflect a more balanced and predictable housing environment compared to recent years.

Disclaimer

This article is for informational purposes only and reflects general housing market forecasts. Real estate outcomes vary by location, property type, and individual circumstances. Nothing herein is intended as legal, financial, or professional advice. Readers should consult appropriate professionals and comply with all applicable local and state regulations.

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