If the 2026 housing market has seemed weird to you so far, it’s not all in your head. Even real estate experts couldn’t have predicted some of the factors that have impacted housing this year.”We entered 2026 with an optimistic view of the housing market’s year ahead: 2026 wasn’t going to be a normal market, but it was at least a step on the road to a more normal market,” Chief Economist Mischa Fisher writes for Zillow.He adds that while Zillow’s initial expectations played out, for the most part, in Q1 2026, Q2 was a different story.I may have reported on the housing market for a long time, but I won’t pretend that I foresaw the Iran war that has kept rates hovering around 6.5% for months. And the higher-than-expected interest rates have had a ripple effect on the housing market.Zillow has released its June 2026 Forecast, predicting what the housing market will do for the rest of 2026. The insights are crucial for anyone interested in buying a home before the end of the year.Low demand will result in stable home valuesZillow foresees home values inching up by just 0.1% this year. Relatively high mortgage rates should keep values relatively flat in 2026.So, how do mortgage rates impact home values?Related: Zillow exposes hidden threat making homes unaffordableMany potential buyers expected mortgage interest rates to fall this year. Now that rates have stabilized at around 6.5%, more people are waiting on the sidelines, as they consider homebuying unaffordable.Since fewer Americans want to buy houses, there isn’t a lot of demand right now. And when demand doesn’t keep up with supply, buyers have more power. Sellers have to set lower listing prices, and bidding wars that raise sales prices are less common.In its May Market Report, Zillow had claimed that the great housing recovery so many had expected was on pause — largely due to mortgage rates.
Though mortgage rates are high, stable home prices can help families afford to buy.boggy22 / Getty Images
Zillow projects that home sales will remain flatOriginally, Zillow had predicted that home sales would grow from 4% to 5% this year. Q1 2026 looked good, with monthly sales increasing by 5.5%.But by May, monthly sales growth had fallen to 1.5%. Zillow now only expects June home sales to increase by 0.8%. Home sale growth would essentially be flat.More on the Housing Market:Experts update mortgage rate, housing market predictionsBank of America reveals surprising housing market shiftRedfin uncovers new problem for homebuyersMortgage rates are yet again a huge factor in this prediction. As potential homebuyers hold off until houses are more affordable, fewer homes are actually selling.It’s not just that people are waiting for mortgage rates to decrease. High mortgage rates contribute to higher housing costs overall, and the American housing affordability crisis is persistent.”With inflation rising faster than incomes, any savings on housing are getting eaten by the cost of everything else, leaving the typical buyer net poorer,” Senior Economist Kara Ng previously wrote for Zillow.In May, Zillow projected 3.8 million home sales in 2026. The company’s prediction has now dropped to 4.76 million — a 0.4% decrease from 2025.Key takeaways from Zillow’s June 2026 ForecastZillow has updated its predictions for key housing market data through December 2026. Here are the company’s new projections:Existing home sales: 3.76 million (+1% YoY)Typical home value growth: +1% annuallyTypical single-family rent growth: +3.1% annuallyTypical multifamily rent growth: +2% annually
Source: Zillow
Related: Mortgage rate news lands Americans in strange situation