Rents up, Existing Home Sales Down, The Housing Recovery is Back on Pause for the Remainder of 2026 (September 2026 Forecast)

• Zillow’s existing home sales forecast points to a 3.5% decline in the fourth quarter, though sales are still expected to finish the year up 1.2%.
• The final quarter of the year is projected to end with inventory rising at double the pace seen at the start of the year. 
• Rent growth expectations continue to accelerate, with the Q4 forecast at 2.1% year-over-year. 

Here at Zillow, we pride ourselves on accuracy and truth-telling in our research. Sometimes that means communicating less great news. As our earlier forecasts predicted, and our latest forecast confirms, we’re expecting existing home sales to continue to decline year-over-year for the rest of 2026, under the weight of high mortgage rates.

Our latest forecast expects Zillow’s count of existing home sales to decline 3.5% year-over-year in the fourth quarter (by NAR's existing home sales measure, a decline of 2.8%), accelerating from a projected decline of 3.2% just last month.  Meanwhile, inventory continues to build, growing 10.1% year-over-year, more than double the pace of the first quarter. 

In total contrast to our outlook for declining existing home sales, our rent forecast has accelerated: we now expect 2.1% growth in multi-family rents in the fourth quarter, up from 1.9% a month ago. 

The shift in market momentum from for-sale to rental is perhaps best illustrated by how much our fourth-quarter expectations have changed since the start of the year. We entered 2026 with mortgage rates forecasted at 6.07% in the fourth quarter. In that environment existing home sales were projected to rise 4.7% and rents by only 0.3%. The runup in energy prices and inflation over the course of the summer has dramatically reshaped the outlook, with the rental market now expected to outperform for-saleas we close the year.

For prospective buyers, the silver lining is more inventory and an uptick in price cuts, giving shoppers more options and negotiating power than they've had in years. For those who can afford to lock in a rate now, doing so offers a hedge against inflation risk, with the option to refinance if rates come down. For those not yet ready to buy, renting remains a compelling option and an opportunity to build savings.

While the expected slowdown in overall sales volume is a disappointing end to the year, overall 2026 still improved over 2025, with total existing homes sales expected to end 2026 up 1.2% from 2025 (up 0.5% in our forecast for NAR’s seasonally adjusted annual rate).