Zillow’s latest housing market outlook projects that mortgage payments on a typical U.S. home will be affordable in 20 of the nation’s 50 largest metropolitan areas by the end of 2026, the highest number since 2022.
This improvement in affordability is driven by a confluence of slow-growing home prices, declining mortgage rates, and rising incomes, which together are expected to ease cost burdens for prospective buyers.
Affordability in this context means that monthly mortgage payments — including principal, interest, taxes, and insurance — are forecast by Zillow to require no more than 30% of the median household income in these markets.
At the national level, Zillow estimates that mortgage costs now consume approximately 32.6% of median income, marking the most affordable conditions since August 2022, with a projected improvement to roughly 31.8% by year’s end.
Zillow Senior Economist Kara Ng characterized the expected trend as “slow and steady.”
“This is what a small-wins year looks like for housing," said Ng. "Rising incomes, subdued price growth, and gradually easing mortgage rates would help buyers regain their footing while allowing homeowners to continue building wealth. These types of slow and steady affordability improvements are exactly what the housing market needs over the long-run."
Key assumptions underpinning Zillow’s forecast include mortgage rates settling near 6% by the end of 2026, modest home value growth of approximately 1.9%, and household incomes rising by an estimated 3.3% over the year. These projections reflect a market environment with less volatility in price appreciation than seen in recent boom years.
While affordability is forecast to improve across most major metros, Zillow identifies Hartford, Connecticut, as a notable exception where affordability is expected to worsen — a trend partially attributed to its designation as the projected hottest housing market in 2026.
Industry reporting underscores this outlook, noting that slowed home price growth combined with declining mortgage costs is expanding the pool of affordable homes in many regions, though availability and local conditions remain highly varied across the country.
