Housing affordability is projected to improve as Realtor.com’s midyear update shows home-price growth cooling in 2026, with the pace of gains expected to be slower than inflation. The forecast, released Wednesday, estimates year-over-year home-price growth of 1.2% for 2026, a rate that would outpace inflation only if inflation continues to fall but otherwise suggests a real-terms moderation in prices.
The report notes that the housing market has shown resilience amid ongoing challenges, with the first half of 2026 delivering more stability than momentum. Realtor.com senior economist Danielle Hale emphasized that prices are not rising as quickly, and that buyers and sellers are adjusting in ways that facilitate deals. The firm’s outlook anticipates momentum to strengthen in the second half of the year as previously sidelined buyers and sellers find terms that work for both sides.
Mortgage rates are expected to remain around 6.3% through the year, a level seen at the end of 2025, because persistent inflation pressures, linked in part to external factors, continue to influence rate trajectories. The slower pace of price growth is projected to contribute to lower monthly mortgage payments on a year-over-year basis, with the forecast calling for a decline around 1.9% in 2026, compared with an earlier projection of about 1.3%.
Existing home sales are forecast to edge higher year over year, rising from about 4.06 million in 2025 to roughly 4.1 million in 2026, though the gain is expected to be smaller than previously anticipated. The inventory of existing homes for sale is also expected to grow at a slower pace, rising about 3.6% year over year rather than an earlier 8.9% forecast, signaling a more tempered supply dynamics.
New home construction has cooled in parts of the country, with the Northeast and Midwest facing continued shortages even as other regions pull back on permits and starts. Builders continue to grapple with higher development costs and regulatory considerations, as the national homebuilding deficit remains sizable.
Against this backdrop, buyers and sellers are adapting to a market where negotiating power is redistributed and price adjustments are more common. The Realtor.com outlook stresses that while price growth is retreating, activity could pick up as terms become more favorable for transaction completion, supporting ongoing, if cautious, market participation.
