Home price appreciation is expected to cool more than previously forecast this year, giving homebuyers some additional affordability relief even as mortgage rates remain stubbornly high, according to Realtor.com's 2026 Midyear Housing Forecast Update.
Realtor.com lowered its forecast for existing-home price growth to 1.2% in 2026, down from the 2.2% increase projected in its December outlook. The company left its mortgage rate forecast unchanged, continuing to expect rates to average 6.3% through the year, while slightly reducing its forecast for existing-home sales to 4.10 million, from 4.13 million previously.
Despite the revision, Realtor.com still expects existing-home sales to increase 1.0% from 2025 levels, suggesting the purchase market continues to recover gradually rather than accelerate.
"The housing market is inching forward as sellers reset expectations, price growth cools, and buyers gain more negotiating power," said Danielle Hale, chief economist at Realtor.com. "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."
Affordability Improving Without Rate Relief
While mortgage rates have remained elevated, Realtor.com said softer home-price appreciation is helping improve affordability more than expected.
The company now projects the typical buyer's monthly mortgage payment will decline 1.9% year over year, a larger improvement than the 1.3% decrease it forecast six months ago. Realtor.com attributed the improvement to slower price growth while mortgage rate expectations remained steady.
The report also notes that home prices are now expected to increase more slowly than projected inflation of 3.4% this year, meaning housing costs are effectively declining in real, inflation-adjusted terms.
According to Realtor.com, stronger income growth combined with slower home-price appreciation means buyers will need a smaller share of their paycheck to cover monthly housing costs.
Sales Outlook Softens Slightly
Realtor.com trimmed its existing-home sales forecast only modestly after a slower-than-expected first quarter and renewed upward pressure on mortgage rates.
The company expects 4.10 million existing homes to sell in 2026, down from its earlier forecast of 4.13 million, while noting that sales activity strengthened in spring despite higher borrowing costs.
Mortgage rate expectations remained unchanged at 6.3%, with Realtor.com citing persistent inflation and economic resilience as factors keeping rates elevated throughout the year.
Inventory Growth Slows
The report also revised its inventory outlook downward.
Existing-home inventory is now expected to grow 3.6% this year, compared with the 8.9% increase forecast in December, although available inventory would still finish above 2025 levels.
Single-family housing starts are now projected to rise 2.0%, slightly below the previous 3.1% forecast.
Meanwhile, Realtor.com increased its homeownership rate forecast to 65.1%, reflecting stronger-than-expected ownership data during the first quarter.
The company also expects rents to continue easing, forecasting a 1.2% decline this year.
The most notable shift in Realtor.com's update isn't its unchanged mortgage rate forecast — it's the growing evidence that affordability is improving through pricing rather than financing.
For much of the past three years, purchase-market discussions have centered on when mortgage rates might fall enough to unlock demand. Realtor.com's latest forecast suggests that may no longer be the only path forward.
Instead, slower home-price appreciation, moderating monthly payments, and more realistic seller expectations are beginning to improve affordability even with mortgage rates expected to remain near 6.3%.
The forecast also aligns with other recent industry outlooks. Earlier this month, Veros Real Estate Solutions projected U.S. home prices will increase just 1.1% over the next 12 months, similarly pointing to a market defined by slow appreciation rather than declining values. Veros also argued that affordability — not a lack of demand — remains the market's central challenge, as elevated mortgage rates and still-high home prices continue to limit buyer activity despite improving inventory.
For originators focused on purchase business, that environment may create more opportunities than another year spent waiting for lower mortgage rates.
