Home price growth is cooling in 2026

A newly updated 2026 housing forecast from the National Association of Realtors now projects home price growth of just 1.2% for the year, down from an original estimate of 2.2% in price growth this year.

This could be good news for some home buyers who would like to join the market in the second half of 2026.

Cooling home prices could help compensate for average mortgage rates that have been keeping some buyers on the fence.

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Why home price growth is cooling

Economic forces are pulling home prices in different directions right now, and the tension between them is what's producing this slower-growth environment.

• Inflation has stayed stubborn. It hit a three-year high earlier this year, which has kept the Federal Reserve cautious about cutting interest rates.
• Mortgage rates, in turn, have held in the 6% to 6.5% range for most of the year rather than easing as some analysts had expected.
• At the same time, the economy has proven more resilient than expected: the labor market has held up, incomes have grown, and spenders haven't pulled back from the market the way they might in a weaker economy.

Put those three forces together and you get a market that's neither booming nor breaking. Sellers can't push prices up the way they did a few years ago, because buyers are more rate-sensitive and more price-conscious.

Still, there also isn't the kind of economic stress that typically drives outright price declines.

The result is growth that's positive on paper but effectively flat, or even slightly negative, once you account for inflation.

What 'cooling' actually means for your budget

The most useful number in this update isn't the price growth figure. It's the monthly payment figure. A typical 2026 buyer's monthly payment is now projected to run about 1.9% lower than what a similar buyer paid in 2025, even with mortgage rates holding roughly steady.

Example is for illustrative purposes only. Rates, payments, and total interest will vary based on credit profile, loan terms, and market conditions.

To put that in perspective: on a home with a $2,600 monthly principal-and-interest payment last year, a 1.9% improvement works out to roughly $50 less per month, or around $600 a year, without needing average rates to drop.

That gain comes almost entirely from slower price growth and modestly stronger income growth, not from a rate cut. If you've been waiting for rates to fall before you feel like the math works, it's worth running your numbers through a mortgage calculator, since the affordability picture may already be a little better than it looks from rate headlines alone.

Some sellers are pricing more realistically

One of the more useful details in this update is behavioral, not just statistical: More sellers are setting realistic asking prices from the start, rather than listing high and cutting later. That's producing fewer formal price reductions than last year, but it doesn't mean sellers have more leverage. It means the negotiation is happening earlier and more transparently.

For buyers, this is worth knowing before making an offer. A listing that hasn't had a price cut isn't necessarily overpriced or off-limits to negotiation; it may simply reflect a seller who priced it close to fair value to begin with. That still leaves room to negotiate on contingencies, closing costs, or timeline, even when the price itself feels firm.

Of course, having a pre-approval in hand can help with negotiations.

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Sales, inventory, and a wrinkle worth watching

Existing-home sales are expected to grow modestly this year, but by less than originally forecast, as a slow start (sales trailed year-ago levels in the first quarter) gave way to a steadier spring and early summer. Inventory is also expected to grow, but at a slower pace than initially projected, so the market isn't flooding with new listings the way some buyers may have hoped.

A growing share of listings are being marketed privately — off the standard multiple listing service or public search portals — rather than broadly advertised. There isn't strong evidence yet that this is meaningfully affecting prices or sales volume, but it does mean some buyers may not be seeing the full range of homes for sale in their market.

If you're house hunting, work with someone who has visibility beyond a standard online search, so you're comparing against the full picture rather than a partial one.

Deciding whether to buy now or wait?

This mid-year forecast doesn't point to a dramatically better or worse window than the one you're in right now: It points to a market that's inching toward better balance.

Prices aren't collapsing, but they're not running away from buyers either, and affordability is improving slightly even without a rate drop.

If your budget works today and you find a home that fits, waiting for a specific price drop or rate move to materialize is a bet, not a guarantee.

Frequently asked questions

Are home prices actually going down in 2026, or just growing more slowly?

Mostly the latter. Nationally, prices are still expected to rise slightly, just by about 1.2% for the year. But because that's slower than inflation, homes are effectively getting cheaper in real, inflation-adjusted terms, even though the sticker price in most markets isn't dropping.

If I'm selling my house this year, does this forecast mean I should lower my asking price?

Not necessarily lower it, but it does mean pricing realistically from day one matters more than in a hotter market. Sellers who price close to fair value upfront are seeing fewer forced price cuts later, while overpricing in this environment risks longer time on market.

Is it better to buy now while prices are cooling, or wait for prices to drop further?

There's no strong signal pointing to a meaningfully better window later this year. Prices are expected to keep growing, just slowly, and mortgage rates are projected to hold steady rather than drop. If your budget works today, waiting for a specific future dip is speculative rather than a sure thing.

What does it mean that home prices are "trailing inflation"?

It means the percentage increase in home prices is smaller than the percentage increase in the general cost of living. In practical terms, a home's price is rising in nominal dollars, but its value relative to your overall purchasing power is holding flat or slightly declining.

Why are mortgage rates still high if home prices are cooling down?

Home prices and mortgage rates are driven by different forces. Prices respond to supply, demand, and local market conditions, while mortgage rates track the bond market and inflation expectations. Persistent inflation and global uncertainty have kept rates elevated even as price growth has slowed.

What are private or off-market home listings, and could I be missing homes because of them?

These are homes marketed directly by an agent or brokerage rather than broadly syndicated to public search portals. It's a small but growing share of the market, and it means the homes you see in a basic online search may not reflect everything actually for sale. Working with an agent who has broader market access can help close that gap.

Bottom line

Home prices aren't crashing, but they aren't sprinting away from buyers either. They're cooling to a pace that's actually a bit friendlier to affordability, even without mortgage rates dropping.

Whether you're buying or selling this year, the practical move is the same: understand your real numbers rather than waiting on a market shift that may or may not arrive on your timeline.

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This article provides industry and market analysis and is not intended as financial advice for any specific reader. For loan advice, please consult a loan officer.