Realtor.com’s midyear housing forecast projects real estate prices will rise just 1.2% in 2026, a sharp downward revision from the 2.2% growth the company predicted in December, as softer sales and asking prices reshape buyer-seller dynamics across the market.
The forecast, released Wednesday by Realtor.com’s economic research team, reflects weaker-than-expected activity in the first half of the year. “The drop in the home price forecast for 2026 is largely based on the trend of softer sales and asking prices so far this year,” says Realtor.com Chief Economist Danielle Hale. “Although inventory growth has moderated from our original projection, the number of homes for sale continues to rise, sapping some momentum from home prices.”
For buyers, the revised forecast brings tangible relief. Because the 1.2% price growth falls below the expected 3.4% inflation rate, home prices are effectively declining in real terms. The typical monthly mortgage payment for a median home sold is now projected to drop 1.9% compared to a year ago, despite mortgage rates holding steady at an average of 6.3% for the year. Household income is also expected to grow 3.9%, further easing the share of a paycheck needed for housing costs.
“From buyers’ perspective, this is a much needed adjustment that begins to improve affordability when combined with mortgage rates that are lower than they were a year ago and incomes that are rising,” Hale adds. The median household income growth forecast was revised upward from 3.6% to 3.9%, reflecting stronger labor market resilience than initially anticipated.
Existing-home sales are now expected to total 4.10 million for the year, growing just 1.0% year-over-year, down from the initial forecast of 1.7% growth and 4.13 million sales. The slower start stemmed partly from the outbreak of war in Iran in early 2026, which drove up energy prices and mortgage rates while creating economic uncertainty. However, sales steadied in April and climbed more convincingly in May, signaling potential momentum in the second half of the year.
Sellers are adjusting to the shift. Asking prices have declined upfront, so price cuts are actually rarer this year than last year among for-sale homes—a sign that sellers have reset expectations to meet market conditions. “Softer asking prices so far in 2026 suggest that sellers have largely understood this context and adjusted to meet the moment,” Hale says. “As a result, even though asking prices are dropping, price cuts are actually rarer this year than last year among for-sale homes.” The sale-to-list price ratio remains near 97% of the original listing price.
New construction has also pulled back. Single-family housing starts are now projected to rise just 2% to 960,000 units, down from the 3.1% growth initially forecast. Builders are managing permit and start activity more conservatively, particularly in the well-supplied South and West, where buyer interest has softened. The national homebuilding deficit still stands at an estimated 4 million homes, offering opportunity for developers in the undersupplied Northeast and Midwest.
Renters will see continued relief, with rents projected to drop another 1.2% for the year as multifamily construction adds to rental supply. This extends a nearly three-year trend of declining rents, boosting mobility among renters seeking affordable housing or better units. Midsize metros such as Colorado Springs, Austin, and Denver continue to attract young professionals, while the San Francisco Bay Area is drawing renewed attention as AI-sector job growth fuels rental demand.
Sources
- Realtor.com — Midyear housing forecast update confirming 1.2% home price growth projection, mortgage rate forecast at 6.3%, monthly payment decline of 1.9%, and income growth of 3.9%
- Realtor.com Economic Research — Full 2026 housing forecast report with detailed analysis of market trends, inventory projections, and affordability metrics
- Fox Business — Coverage of Realtor.com forecast showing home price growth cooling to 1.2%, below inflation, with improved affordability
