The housing market recovery is back on pause. Here's how to make the most of it.

Hopes of a 2026 housing rebound faded in May.

Both home sales and new listings fell behind 2025 levels last month, as inflation and mortgage rates moved higher. New listings, which have historically peaked in May or June, ticked down 0.8% month over month and fell 4.1% lower than last year as sellers pulled back.

Amid all this, sales still climbed from April — month-over-month increases in sales are typical in spring — but the trajectory lost momentum, declining nearly 3% from last year. The numbers show a muted buyer response to the spring selling season, as inflation moved higher, household finances deteriorated and mortgage rates shot back above 6.5%. 

Meanwhile, inventory — more homes for buyers to choose from — continued to rise on an annual basis, extending a trend of annual growth for 30 straight months. But the pace is slowing and could start to move downward earlier than what is typical for this time of year – a sign that the home shopping season could end earlier than usual in 2026.

“We’re seeing a recovery that got cut short this year,” says Zillow Senior Economist Orphe Divounguy. “Mortgage rates are still lower than they were a year ago, and the typical mortgage payment is still about 3% lower, so affordability has improved. But the cost of everything else has gone up.”

What May's numbers mean for buyers

May was a tougher month for buyers than April. Mortgage rates pushed the typical monthly mortgage payment about 1% higher. But that payment is still 3.1% lower than it was last May.

Homes are sitting a little longer as buyer demand cools. This means sellers could be more open to working with you than they were a few months ago — on price, on repairs, or on a rate buydown.

What you can afford shifts with every rate move, so the monthly math matters more than the headlines right now.

If you’re buying: Get pre-approved with a lender before you start touring. A pre-approval verifies what a lender will actually lend you at today's rates. It also shows sellers you're a serious buyer and lets you move fast when you spot the right home. Zillow's BuyAbility tool can give you a quick read on your budget before you talk to a lender.

Consider: Ask a lender about a temporary rate buydown. With buyers pulling back, more sellers may be willing to chip in to cover one — lowering your payment for the first year or two while rates settle and you begin to build equity.

What May's numbers mean for sellers

Home sales saw the first real annual dip of 2026. Home values are roughly unchanged on a year-over-year basis so this isn't yet a price slide nationally. But with increasing inventory and buyer pullback, pricing and presentation decide whether your home sells in two weeks or sits for two months. 

If you’re selling: Price to what's actually selling this year instead of last year or the year before. Ask your agent to show you which comparable homes in your neighborhood have gone pending in the last 30 days — that's the real benchmark buyers are using.

Tools like Zillow Showcase or Zillow Preview can help your listing stand out and drive stronger buyer engagement from the start.

Consider: Decide your negotiation floor before the first offer comes in. Buyers in this market are asking for price cuts, repair credits, and rate buydowns, and the sellers who move fastest are the ones who already know what they'll trade and what they won't.

Market stat for May: Share of affordable listings

Nationally, more than one in three listings are now affordable to a median-income household. That share rose to 35%, up from 31% a year ago — the highest for any May since 2022. But relief still depends heavily on where you’re shopping. Here’s how the share of affordable listings compares nationally and across the 50 largest metros. 

 *assumes median household income and a 20% down payment