Mortgage rates are still painfully high, but aspiring homeowners should be relieved to hear that home prices aren’t skyrocketing right now.
According to a new mid-year report from Realtor.com, home prices climbed more slowly than expected this year, ticking up only 1.2%. That price growth is roughly half of what forecasters projected for 2026 and ends a multi-year run of appreciation above 2% per year.
As U.S. hiring and unemployment stays relatively steady, the median household income is expected to rise by 3.9% – a factor that could give potential buyers a little extra padding. With wage growth expected to outstrip the anticipated inflation rate of 3.4% for the year, buyers might have a tiny bit more breathing room when it comes to real costs.
“The drop in the home price forecast for 2026 is largely based on the trend of softer sales and asking prices so far this year,” Realtor.com Chief Economist Danielle Hale said in the report. “Although inventory growth has moderated from our original projection, the number of homes for sale continues to rise, sapping some momentum from home prices.”
The change tracks a broader shift in most major U.S. cities from seller’s markets toward buyer’s markets. In April, only a quarter of top metro areas in the country qualified as seller’s markets, with the rest shifting toward giving the buyer the upper hand. That month, only 12% of the top 50 metro areas were moving the opposite direction – a contrast to the near-universal seller’s market conditions from the post-pandemic homebuying frenzy.
Competing forces
Home prices might not be growing as fast, but high mortgage rates are what’s really hurting the dream of homeownership these days. In its report, Realtor.com predicts that rates will average 6.3% through the year, matching its original forecast.
Last year’s interest rates sat around 6.6% on average, so while 2026 is seeing a sliver of improvement, rates are still crushing for many people hoping to buy a home. This year’s predicted average of 6.3% is more than two percentage points higher than the 4% average rate between 2013 and 2019, a difference that can easily add hundreds of dollars to a monthly mortgage payment.
The broader landscape of inflation, wage growth, and home price leveling in 2026 should shake out to a bit more affordability for home buyers in the near future. Realtor.com’s report points to one promising sign: The average monthly home payment in 2026 is expected to be 1.9% lower than it was last year.
“From buyers’ perspective, this is a much needed adjustment that begins to improve affordability when combined with mortgage rates that are lower than they were a year ago and incomes that are rising,” Hale said.
