5 Housing Market Predictions for 2026
As 2025 comes to a close, real estate marketing platform Zillow is looking ahead at what the housing industry can expect in 2026. From renter demand to new-construction activity, here’s what Zillow predicts will make a mark on the 2026 housing market:
1. Home values will continue to see modest growth
U.S. home values are forecasted to increase by just 1.2% in 2026, potentially alleviating cost concerns for homebuyers. Mortgage rates, however, aren’t expected to drop below 6% anytime soon, but they also aren’t expected to rise much further.
2. New-construction activity will be limited
With a build-up of new homes currently available for sale, single-family construction activity will likely be weak throughout most of 2026. As of August, single-family starts were trending 5% below last year’s pace.
With that in mind, builders' focus throughout 2026 will be to sell existing stock. Rate buydowns and other sales incentives will continue to be the norm in the new-home market throughout the year.
3. Existing-home sales will improve
Pent-up demand is expected to bring more buyers back to the resale market in 2026. With Zillow predicting 4.26 million existing-home sales in 2026, sales activity is expected to grow by another 4.3% from this year’s projected total.
4. Lifestyle choices, rather than affordability alone, will drive renter demand
Pent-up demand may bring some buyers back to the market, but others will continue to rent. In addition to affordability concerns, more Americans in 2026 are expected to rent for the low-maintenance lifestyle it offers. Nearly three in five renters say they plan to keep renting next year, and even if mortgage rates dropped, only 37% say they would buy, which is down from 45% of renters who said the same in 2024.
5. Buyers want home features that will save them money over the long haul
An increase in household expenses is changing how homebuyers think about their space. Buyers no longer just want a low listing price; they want home features that will save them money, such as energy-efficient and zero-energy fixtures and products, EV charging stations, and walk-in pantries with space for bulk food items.