Zillow’s 2026 Housing Market Predictions: A Modest Thaw Ahead

As we close out 2025, Zillow’s economists have released their forecast for the U.S. housing market in 2026—and the outlook is cautiously optimistic. After a largely flat 2025, they expect the market to warm up slightly with better affordability, more sales activity, and steady (but not explosive) price growth.

Here are the highlights from Zillow’s December 2025 report:

•  Home Prices: Nationwide home values are projected to rise about 1.2% in 2026. That’s modest growth after near-zero change this year. Fewer markets will see price drops (only about a dozen major metros compared to two dozen in 2025), which means more homeowners will build equity.

•  Home Sales: Existing-home sales should climb to around 4.26 million, up roughly 4.3% from 2025 levels. Lower mortgage rates and pent-up demand from sidelined buyers will help drive this increase.

•  Mortgage Rates: Don’t expect rates to fall below 6% anytime soon. Persistent inflation will keep them elevated, though gradual easing should give buyers a bit more breathing room.

•  Inventory & New Construction: Builders are pulling back, with new single-family home starts likely hitting their lowest level since before the pandemic (under 947,000 units). Many are offering incentives like mortgage rate buydowns to move existing inventory instead.

•  Rents: Multifamily rents are expected to grow just 0.3%, continuing the affordability gains we’ve seen recently (incomes have outpaced rents in most major markets). Single-family rental growth could be a bit higher at around 2.3%. Overall, renters should spend a smaller share of their income on housing—around 27.2% for a typical rental.

•  Overall Market Feel: Zillow calls 2026 a year of “steadier footing.” Buyers will have more options and better affordability, while sellers can count on stable prices and consistent demand. No big boom, no sharp bust—just gradual progress toward a more balanced market.

Other trends Zillow flagged include growing interest in energy-efficient features (think EV chargers and home batteries), more people choosing to rent long-term by choice, and increasing use of AI tools in real estate transactions.

If you’re thinking about buying, selling, or investing in 2026, this forecast suggests patience will be rewarded. The market isn’t going to flip overnight, but conditions look a little friendlier than they’ve been in recent years.

(Source: Zillow Research, “2026 Housing Market Predictions,” published December 4, 2025. Full report available at: https://www.zillow.com/research/2026-housing-predictions-35800/)