Realtor.com released a midyear update to its 2026 housing market forecast, projecting that home price growth will slow to 1.2% this year, a rate lower than both the original forecast and the pace of inflation. This slowdown means home prices are effectively declining in real, inflation-adjusted terms, which is expected to improve housing affordability for buyers [1]. According to Realtor.com senior economist Danielle Hale, the first half of 2026 brought stability rather than momentum to the housing market, with sellers resetting expectations, price growth cooling, and buyers gaining more negotiating power [1].
Mortgage rates are forecasted to remain steady at 6.3%, the same level as at the end of 2025. This stability is attributed to a resurgence of inflation caused by the Iran war, which undercut prospects for interest rate cuts earlier in the year that could have helped mortgage rates decline [1]. The updated forecast suggests that the slower pace of home price growth will help lower monthly mortgage payments on a year-over-year basis, with payments expected to decline by 1.9% this year—an improvement over the initial projection of a 1.3% dip. In contrast, average monthly mortgage payments rose 1.9% in 2025 and were up 7% on average from 2013 to 2019 [1].
Existing home sales are expected to see modest improvement, rising from 4.06 million in 2025 to an estimated 4.1 million this year. However, this growth is lower than the original forecast of 4.13 million homes sold in 2026. Inventory of existing homes for sale is also projected to grow at a slower rate than previously anticipated, increasing 3.6% year over year instead of the 8.9% gain projected in the initial forecast [1].
New home sales have softened as mortgage rate buydowns and price cuts that previously encouraged buyers have lost their effectiveness amid price stabilization. Builders have pulled back on permits and new home starts, particularly in the South and West, which had previously driven much of the national construction and have recovered more fully from supply shortages. Nationwide, the homebuilding deficit remains at an estimated 4 million homes, with the biggest opportunities for new construction in the Northeast and Midwest [1].
Hale noted that buyers and sellers have shown resilience this year, with sellers meeting the market with more realistic asking prices, which is helping deals get done. Looking ahead, Realtor.com expects momentum to build through the second half of the year as more sidelined buyers and sellers find terms that work for both sides [1].
CONCLUSION
Realtor.com's updated forecast points to a more stable housing market in 2026, with slower home price growth improving affordability and modest gains in existing home sales. While mortgage rates are expected to hold steady, the market is adjusting to new realities, with both buyers and sellers showing resilience. The outlook suggests gradual improvement in activity as the year progresses, though challenges such as a persistent homebuilding deficit remain.