Zillow Group Predicts Housing Market Recovery with Increased Sales and Stability by 2026

Zillow's Positive Outlook: A Healthier Housing Market on the Horizon

Zillow Group anticipates a modest recovery in the housing market by 2026, projecting a 4.3% increase in existing home sales, which equates to around 4.26 million units. This positive shift is attributed to pent-up demand from prospective buyers and improved affordability conditions. Mischa Fisher, Zillow's chief economist, highlights that the market is beginning to stabilize, creating an environment where both buyers and sellers can operate with greater confidence. As inventory levels rise, prospective homeowners find more options available, while sellers can expect a more predictable pricing landscape, reducing the volatility that has characterized recent years.

The forecast also indicates a slight increase in home values, with a predicted rise of 1.2%. Notably, the number of major markets experiencing annual price declines is expected to drop significantly, from 24 in October 2025 to just 12 in 2026. This trend suggests a healing market where fewer owners face the stress of declining home values, allowing more homeowners to build equity over time. With the expected improvement in affordability, Zillow's insights reflect a broader transition in housing preferences among Americans, as buyers adapt to a post-pandemic environment that prioritizes stability and resilience.

While mortgage rates are forecasted to remain above 6%, Zillow's analysis suggests that the overall outlook for the housing market is becoming increasingly optimistic. Multifamily rents are projected to increase minimally by 0.3%, offering some relief in affordability, although challenges may persist in high-rent urban areas like New York City. As the housing sector inches closer to recovery, Zillow's commitment to accurately tracking shelter inflation offers valuable insights for buyers and sellers navigating this evolving landscape.

In summary, Zillow's projections for the 2026 housing market underscore a gradual recovery characterized by increased sales, stable prices, and improved affordability. As the company continues to monitor these trends, it remains optimistic about the potential for a healthier housing sector, fostering a more balanced environment for both buyers and sellers.