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Key Takeaways :
- Home prices are expected to rise just 1.2% in 2026.
- Mortgage rates should average 6.3%, slightly below last year.
- Affordability may improve as incomes rise and monthly payments dip.
- Rents are projected to fall 1.2%, giving renters some relief.
Good times for home buyers. House prices will increase at a lower rate than anticipated throughout the remainder of the year, thus saving you some money.
This is part of the 2026 mid-year housing market forecast. Price increases have been revised downwards from 2.2% to just 1.2%.
As a point of reference, price growth was 2% in 2025.
Since the rate is below the rate of inflation of 3.4%, prices are in fact declining in real terms.
What Buyers Should Expect
Affordability is slowly improving. Here’s why:
- Mortgage rates will average 6.3% for the year, below last year’s 6.6% but well above the 2013–19 average of 4%.
- Household income is set to grow 3.9%, beating the earlier 3.6% estimate.
- The typical monthly mortgage payment is projected to fall 1.9% from a year ago.
“This represents a very welcome change from the buyer’s perspective that starts making housing more affordable,” the chief economist adds.
The twist? Inventory expansion dropped from 8.9% to 3.6%. Single-family starts are also down, as they are forecasted to come in at 960,000 homes, an increase of just 2%.
The shortfall of 4 million homes remains the same for the United States, providing huge prospects for construction in the Northeast and Midwest.
What Sellers Should Expect
Existing home sales are expected to reach 4.10 million, a rise of 1% from its all-time 30-year low in 2025.
According to Hale, the slow start was due to the Iran war that raised the cost of energy and interest rates. Sales stabilized in April and increased in May.
The sellers are adjusting themselves by setting realistic prices right away:
- Asking prices are softer this year.
- Price cuts are actually rarer than last year.
As Hale states, “Sellers will want to enter the market mindfully and price accordingly.”
What Renters Should Expect
The rents are expected to fall by 1.2% due to the addition of new rentals into the market.
Destination for renters:
- Midsize metros like Colorado Springs, Austin, and Denver attract young professionals.
- The San Francisco Bay Area is heating up as the AI boom fuels jobs.
- New York City renters may feel stuck after a rent freeze passed under the Mamdani platform.
Relief in the future depends on whether construction is able to keep up with the demand generated by young adults ages 25 to 29.
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