This year has gone in a direction few could have predicted. A year of expected normalization and stabilization for the housing market ran into new headwinds in the form of a conflict in the Middle East, pushing some economists to shift their outlooks moving forward.
Expectations now are still pointing toward some normalization, as seen in Realtor.com®’s 2026 Forecast Midyear Update. This is especially true when it comes to improvements in affordability. However, other trends will be slower to develop, specifically home sales and housing construction.
The portal’s original forecast back in December was fairly modest, expecting a 1.7% increase in existing-home sales to 4.13 million, a 2.2% increase in home prices and mortgage rates to end up around 6.3%.
Now, Realtor.com is forecasting home prices to grow by just 1.2%, existing-home sales to increase by 1% to 4.10 million and for mortgage rates to still end the year around 6.3%. In addition, expectations for existing inventory were revised down from 8.9% growth to 3.6%, and the growth for housing starts was shifted from 3.1% to 2%.
Despite these largely negative shifts, Realtor.com Chief Economist Danielle Hale said that the economy of the first half of 2026 “proved resilient” and “delivered stability.”
“The housing market is inching forward as sellers reset expectations, price growth cools, and buyers gain more negotiating power,” she continued. “Looking ahead, we expect momentum to build through the second half of the year as more sidelined buyers and sellers find terms that work for both sides.”
The numbers
Home-price growth has been cooling significantly, with the Case-Shiller Index starting off 2026 with the “weakest start to a year for home prices since the early 2010s,” as characterized at the time by Bright MLS Chief Economist Lisa Sturtevant. The latest Case-Shiller continued to show the same trend, with Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, noting that “home values have now declined in real terms for an 11th straight month.”
On the trend of improved affordability, Realtor.com also upwardly revised the expected decrease in mortgage payments, shifting from a 1.3% decrease to a 1.9% decrease as home prices see continued cooling.
Existing-home sales have also been relatively slow so far this year, kicking off 2026 with an 8.4% fall in January, but turning the tide over time to a 3.2% increase in May. In addition, housing starts have been performing relatively poorly, recently hitting a six-year low as housing construction faces continued adversity from increased costs.
The lack of revision when it comes to mortgage rates, however, may surprise some. The mortgage environment has been especially volatile this year due to the conflict with the Middle East that began at the end of February and remains up in the air, with a ceasefire deal set out on the table but attacks still continuing.
However, Realtor.com’s original (and sustained) prediction of 6.3% was modest at the time, and the portal noted that the 10-year yield has held between 4% and 4.5% so far throughout 2026, which should keep mortgage rates in the 6%-6.5% range for the year.
The shift in expectations for inventory is also interesting given that existing home inventory has been continuously growing throughout 2026, but the rate is slower than the widely expected larger relief of the rate lock-in effect.
Resilience has been a common message amongst economists as of late, as spring 2026 shaped up to be historically better than 2025, despite headwinds. Post-Q1, Realtor.com Senior Economist Jake Krimmel painted a picture of “cautious optimism” for the months ahead as “buyers and sellers have adapted to operating under a cloud of macro volatility in ways they hadn’t in spring 2025, when the tariff shock caught everyone off guard.”
Additionally, despite a slightly downward revision in sales, the portal actually shifted its prediction for the homeownership rate slightly upward, from 64.8% in December 2025 to 65.1% now.
“Buyers and sellers have shown a lot of staying power this year,” added Hale. “This is a market where people are adjusting and showing up rather than giving up. Sellers are meeting the market with more realistic asking prices, which is helping deals get done.”
Beyond the usual market indicators, there’s another trend of 2026 that’s been topping headlines: private listings.
Realtor.com said that the evolution of private listing networks and the MLS landscape is a “wildcard to watch in the second half of 2026,” as currently there’s only limited evidence available suggesting these listings affect sales/prices, but the effect could potentially grow as the trend does.
“Keeping listings off the open market changes the equation for everyone involved,” said Hale. “Sellers who go private are trading away visibility and competition among buyers, and that competition is usually what pushes a sale price up. For buyers, it means they aren’t seeing every home or the whole market, making it harder to know what a fair price even looks like. That’s a real cost with real consequences and is something we should be cautious of as the market is starting to find its footing.”
