Housing Market Predictions for 2026: What's Next for Buyers and Sellers

The housing market was a tough go for many buyers and sellers this year, but 2026 should usher in a healthier, more balanced market with improved affordability, more choices and price relief for renters saving for down payments, according to Zillow economists’ predictions.

“The housing market is finally settling into a healthier state, with buyers and sellers starting to return,” said Mischa Fisher, chief economist at Zillow. “Buyers are benefiting from more inventory and improved affordability, while sellers are seeing price stability and more consistent demand. Each group should have a bit more breathing room in 2026.”

Looking ahead, here’s how the economists see 2026 shaping up for buyers, sellers and renters.

A modest rise in home prices nationally

After a year of mostly flat growth, home values are predicted to rise a modest 1.2% in 2026. Of course, local markets have their own dynamics, and some markets will lose value while others see larger price growth. The economists predict 12 major markets will see price declines next year, half the number that experienced price drops in 2025. Prices in the South are expected to see the biggest bounceback. For example, modest price growth is predicted for markets like Miami, Orlando and Atlanta, which have been slowly recovering from steep price declines in 2024.

For buyers, the modest price growth could make saving for a down payment easier and improve affordability, especially if wage growth continues to outpace the rise in prices. For sellers, the price trend could mean more stable pricing strategies and more consistent buyer demand for well-priced and well-marketed homes.

As affordability improves for buyers, and more sellers list their homes for sale in 2026, economists expect competition to pick up.

Relatively steady mortgage rates

Forecasting mortgage rates is notoriously hard, even for the experts. But economists can look at some guideposts like inflation to see where things might end up. To that end, Zillow economists have a good track record of predicting inflation related to housing, which makes up 40% of the Consumer Price Index. Given that track record, Zillow economists predict that mortgage rates will likely stay above 6% in 2026. Lower rates in 2025 helped push affordability to a three-year high, and further rate moderation should help more buyers as they look for homes in 2026.

A tiny rise in apartment rents

Thanks to a boom in multifamily construction, apartment rents should stay essentially flat in most of the country, with miniscule growth of 0.3% predicted for 2026. One exception is New York City, which has sky-high home prices and a chronic shortage of rental housing that keeps rents high. The imbalance between supply and demand in the city led to a 4.8% increase in asking rents from January through October of 2025, according to the StreetEasy Rent Index. Buying in the city isn’t expected to get any cheaper, which means that rental demand will remain high and rents are expected to accelerate next year.

People renting single family homes aren’t expected to fare as well as apartment dwellers. Rents nationally for single family homes are projected to climb by 2.3% as potential buyers continue to rent longer. 

Fewer new homes built, but more incentives for buyers

With a large pipeline of new homes already built or under construction, builders have limited incentives to continue building at the same clip in 2026. With high construction costs – both in financing and materials — and a stagnant labor market that has curbed the main reason people move (jobs), fewer new homes are expected to hit the market. The upside for buyers: builder incentives, such as interest rate buydowns, could become more common, especially in areas where affordability remains challenging.

More kid-friendly rentals

The growing share of families with children who rent their homes will mean more buildings will be vying to attract them with family-friendly amenities such as “imagination centers” or “homework pods,” economists predict. Renters with kids under 18 account for 37% of renters, a 4 percentage point increase from the 33% who rented a year ago, according to the Zillow Consumer Housing Trends Report.  

In New York City, communal spaces are expected to become defining features of the rental landscape in 2026 and beyond, according to StreetEasy predictions.

Money-saving home features will become mainstream

The rising costs of running a home will continue to influence home trends in 2026. Think energy-efficient features like whole-home battery storage, electric vehicle charging stations and so-called “zero-energy” homes that produce as much renewable energy as they consume, resulting in lower energy bills.

More homes also will be outfitted with things like cold zones for bulk storage and refrigerated drawers to help families capitalize on money-saving strategies and cut waste by keeping food fresh longer.

Artificial intelligence will play a bigger role in home buying, selling and renting

AI is expected to remove more of the friction in housing transactions, morphing from advisor to manager in 2026. For example, instead of recommending actions, AI will help connect buyers and sellers with the right real estate agents, schedule tours, and facilitate negotiations and closing prep. By automating routine actions and streamlining, the economists predict that AI will help bring more predictability and sharper decision-making to real estate transaction.