Zillow Makes 5 Predictions for the 2026 Housing Market

The 2025 housing market gave us some small wins:

• Slight affordability relief.
• A few more listings hitting the market.
• Buyer-friendly conditions creeping into 19 major metros.

It wasn’t a breakthrough year. It was a warm-up.

Now Zillow is out with its 2026 forecast, and the message is unmistakable: The market is slowly getting healthier. No rapid rebound. But no crash looming either. Steady progress in pricing, demand, and the rental landscape.

So, here’s a quick breakdown of Zillow’s 5 biggest predictions on what happens next.

Home Prices Will Rise, While Fewer Markets Slide

Zillow expects national home values to grow 1.2% in 2026 after being mostly flat this year. More importantly, price declines should become far less common.

Here’s what that looks like in practice:

• The number of major markets posting annual price drops is projected to fall from 24 to 12.
• Price stability gives more homeowners a chance to build equity instead of losing it on paper.
• Slightly lower mortgage costs will help more buyers stay in the game, supporting values.

For you, that means pricing conversations start to lean less on “Will this fall apart?” and more on “How do we position this home within a stable range?”

Mortgage Rates Hold Above 6%, But Affordability Improves

Zillow doesn’t see mortgage rates falling below 6% in 2026. It’s in good company in that respect, with Realtor.com predicting 6.3% as both the average and end-of-year rate for 2026.

Pandemic-era rates are gone. Even so, affordability finally improved to a 3-year best, and that trend should continue as inflation normalizes.

A few rate dynamics to keep in mind:

• Shelter inflation drives 40% of the consumer price index (CPI).
• Zillow’s track record in predicting shelter costs gives extra weight to this outlook.
• Gradual rate moderation still helps borrowers qualify and move forward.

Even without major rate cuts, more people should be able to buy. Your job is to help them understand that “above 6%” does not mean “impossible,” especially in a world where incomes and prices are starting to align in a healthier way.

Existing Home Sales Tick Higher as Moves Resume

Zillow projects 4.26 million existing home sales in 2026. That’s a 4.3% increase from this year’s expected total. It’s not a boom, but it does reflect a real release of pent-up demand.

Compare that to Realtor.com’s prediction of a 1.7% uptick in existing home sales for the coming year, as well as (at the other end) Fannie Mae’s predicted 7.8% annual increase.

After 2 years stuck in place, more homeowners want to move:

• Lock-in fatigue is real for people sitting on ultra-low rates.
• Lower monthly payments, even by a modest amount, unlock mobility for buyers who have been on pause.
• A stronger-than-expected fall buying season hints at a more active spring.

Transactions will stay below long-term averages, but direction matters, and the direction is finally up. You can lean into that story when you talk to anyone who feels like the market is “dead.” It is not. It is thawing.

Builders Pump the Brakes on Single-Family Starts

While resale activity improves, construction takes a timeout. Zillow expects 2026 to be the slowest year for single-family starts since 2019.

Here is what is driving that shift:

• Single-family starts are trending 5% below last year’s pace.
• A further 2% drop would push starts under 947,000, the lowest level since the start of the pandemic period.
• Builders are sitting on plenty of nearly new inventory already delivered or underway.

Expect incentives like rate buydowns to stick around as long as affordability stays tight in many metros. You can use that to your advantage when comparing new builds to resale opportunities and when helping buyers run the math on total monthly costs instead of just list prices.

Renting Evolves: From Affordability Relief to Lifestyle Choice

Rent affordability is one of the biggest bright spots in the entire forecast. Multifamily rents are expected to rise just 0.3% in 2026, giving incomes more room to catch up. The share of income needed to rent is already down to 27.2%, the lowest since August 2021.

At the same time, the renter profile is shifting fast:

• Single-family rents are still expected to grow 2.3% as buyer delays persist.
• Nearly 3 in 5 renters plan to keep renting next year.
• Only 37% say they would buy if rates fell, down from 45% last year.
• 37% of renters have a child under 18, up from 33%.
• Parents now represent about one-third of apartment shoppers.

New York City is the exception. Zillow’s StreetEasy team expects rent growth there to accelerate in 2026.

If you work with renters, this is your signal to treat them as long-term relationships, not just future buyers in waiting. Many are choosing renting as a lifestyle, not as a temporary setback.

Bonus Future Forces to Watch

Affordability and shifting lifestyles aren’t the only disruptors coming into focus. Zillow highlights a couple of trends that could reshape expectations around both homes and transactions.

Here are the ones worth keeping on your radar:

• Smart home efficiency is becoming a priority, including EV chargers, whole-home batteries, and zero-energy-ready designs.
• Listings increasingly feature cost-saving amenities like garage cold storage zones, larger pantries, and refrigerated drawers to reduce grocery waste.
• AI is expected to move beyond task suggestions and start coordinating more of the transaction, from tour scheduling to negotiation support and closing prep.

These upgrades and technologies aren’t just bells and whistles. They influence what buyers are willing to pay for and how smooth they expect the experience to feel from first click to closing table.

This isn’t a market working itself back into a frenzy. What we’re looking at is a slow climb toward balance.

The upsides:

• Slightly stronger pricing
• Better affordability
• More mobility
• More chances to work with people who are finally ready to move

As 2026 approaches, this is not a time to slow your roll (expecting things to get easier is never a good play for an agent).

The coming year will be a LOT like 2025, and nothing like 2021. Strategize accordingly.

If you stay close to the data, you’ll be in a much better spot to explain what’s actually happening and to capture the opportunities opening up as the market warms.