Zillow economists have revised their 12-month forecast, projecting that U.S. home prices will rise +0.9% between January 2026 and January 2027, as measured by the Zillow Home Value Index. This represents a mild downward revision from the previous forecast of +2.1%.
The latest forecast expects home prices to remain close to the current pace, with a +0.2% increase at the latest reading. While the national home price forecast is not negative, it is not exactly bullish either, with Zillow calling for a soft national housing market in 2026. The forecast suggests that national housing affordability may improve slightly as U.S. income growth outpaces U.S. home price growth. Among the 300 largest U.S. metro-area housing markets, Zillow expects the biggest home price increases to occur in cities such as Rockford, IL (+5.4%), Atlantic City, NJ (+4.8%), and Syracuse, NY (+4.4%). On the other hand, the biggest home price declines are expected in cities such as Houma, LA (-6.5%), Lake Charles, LA (-5.6%), and New Orleans, LA (-4.1%).
According to Zillow economist Kara Ng, improved affordability and a continued inventory recovery are contributing to a more favorable housing market. A median-income U.S. household can now afford a $331,483 home, an improvement of $30,302 since last year. The number of homes that a median-income household can afford represents 40.3% of listings, up from 34.8% a year ago. With mortgage rates down slightly and home prices falling in some markets, housing affordability is a bit less strained heading into spring 2026 than it was in spring 2025.
Leave a Reply