Housing affordability is expected to improve with the pace of home price growth slowing to a rate that’s lower than inflation, a new report finds.
Realtor.com on Wednesday released a midyear update to its 2026 housing market forecast that estimates home price growth will slow to 1.2% this year, a rate that’s slower than the original forecast for the year and is slower than the pace of inflation. That means home prices would be effectively declining in real, inflation-adjusted terms.
“Against a backdrop of both familiar and new challenges, the economy has proved resilient. As a result, the first half of 2026 delivered stability more than momentum in the housing market,” said Realtor.com senior economist Danielle Hale.
“The housing market is inching forward as sellers reset expectations, price growth cools, and buyers gain more negotiating power,” Hale said. “Looking ahead, we expect momentum to build through the second half of the year as more sidelined buyers and sellers find terms that will work for both sides.”
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Mortgage rates are projected to hold steady at 6.3%, the same level they were at when 2025 ended, as a resurgence of inflation caused by the Iran war undercut the prospects of interest cuts in the first of the year that could’ve helped mortgage rates decline.
The slower pace of home price growth is expected to help lower monthly mortgage payments on a year-over-year basis, which the updated forecast suggests will decline 1.9% this year – more than the initial projection of a 1.3% dip.
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By contrast, the average monthly mortgage payment rose 1.9% in 2025 and was up 7% on average from 2013 to 2019.
Existing home sales are expected to see modest improvement from a year ago, rising from 4.06 million in 2025 to an estimated 4.1 million this year – though the growth is projected to be lower than the original forecast of 4.13 million homes sold in 2026.
“Buyers and sellers have shown a lot of staying power this year,” Hale said. “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.”
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Inventory of existing homes for sale is also expected to grow at a slower rate than previously anticipated, rising 3.6% year over year rather than the 8.9% gain projected under Realtor.com’s initial forecast for this year.
New home sales have softened as mortgage rate buydowns and price cuts that helped encourage buyers to approach builders have lost their pull amid the stabilization of prices.
Builders have pulled back on permits and new home starts the most sharply in the South and West, which had driven much of the national construction and have recovered more fully from supply shortages.
Across the country, the homebuilding deficit remains at an estimated 4 million homes, with the biggest opportunity in the Northeast and Midwest, which face the most significant shortages.
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