7 Housing Trends To Watch for in 2026, Including Affordability Improvement
The housing market is expected to continue stabilizing in 2026 as affordability improves, drawing buyers back, according to Zillow. In a report, the home marketplace revealed several predictions for the market next year.
For one, home values are forecast to rise modestly by 1.2% after a flat 2025, supported by slightly easing mortgage costs that allow more buyers to remain in the market. As prices increase, fewer homeowners will be underwater in most major markets, with only 12 expected to see declines next year, Zillow forecasted.
Meanwhile, mortgage rates are unlikely to fall below 6%, the report predicts. However, borrowers have already seen some relief this year, with affordability improving to a three-year high. While ultra-low pandemic-era rates are behind us, gradual moderation should help more buyers re-enter the market.
Existing home sales are projected to reach 4.26 million, a 4.3% increase from 2025.
New construction is expected to remain slow as builders hold back amid a surplus of already built and under-construction homes. Single-family starts are 5% below last year’s pace and are projected to hit their lowest level since 2019. Builders may continue offering incentives, such as rate buydowns, to keep inventory moving, particularly in markets where affordability is tight.
Rent affordability is also improving across much of the country. As of October, a median-income household would spend 27.2% of its income on rent, the lowest share since August 2021. Zillow forecasts multifamily rents to rise just 0.3% in 2026, giving incomes a chance to catch up, while single-family rents are expected to climb 2.3% as some potential buyers delay purchases.
Lifestyle choices are increasingly shaping housing demand. Many Americans rent by choice to maintain mobility and reduce home-maintenance responsibilities. Nearly three in five renters plan to continue this lifestyle next year, according to Zillow. The share of renters with minor children has risen from 33% to 37%, driving demand for family-friendly amenities such as imagination centers and homework pods. In New York City, experts expect communal spaces to become a defining feature of the rental market in 2026 and beyond.
Artificial intelligence is set to play a larger role in real estate transactions. In 2026, AI is set to go beyond offering advice to coordinating the buying, selling and renting process. AI assistants will manage tasks end-to-end — from connecting buyers and sellers with agents to scheduling tours, negotiating and preparing closings. This “agentic” approach promises to streamline decision-making, automate routine work and make transactions more predictable for all parties, according to Zillow.
Source: GlobeSt/ALM