Zillow Predicts Flat Home Prices Through 2026 — What That Means for Buyers and Investors

Investors (buy-to-let and portfolio managers)

• Multifamily investors should be mindful of new supply hitting the market and accept slower rent growth in many metros.
• Single-family rental investors might see modest income growth, but cap-rate compression is unlikely if prices remain flat nationally.
• Because sales volumes remain subdued relative to history, liquidity risk is something to account for: selling an investment may take longer than during boom periods.
• Strategy tip: consider markets with constrained for-sale supply and stable job growth where rent growth can outpace national averages. Conduct local supply-demand analysis rather than relying on national numbers alone.

Regional nuance and the limits of a national forecast

Zillow’s forecast is national by design. That means:

• Local markets will diverge. Some metros could see sharper price gains if local demand outpaces supply, while others—especially those with heavy multifamily deliveries—could see softer price or rent movements.
• Investors and buyers must translate national projections into metro- and neighborhood-level analysis. ZHVI and ZORI are useful starting points but local job markets, zoning rules, builder activity and migration patterns write the local script.

I cannot predict which metro will outperform, but the principle is straightforward: when national figures show near-zero price change, local fundamentals determine who wins and who does not.

Risks and caveats: where the forecast could be wrong

We must be candid about key risks that could push outcomes away from Zillow’s baseline:

• Mortgage rates could fall faster or rise again. Faster declines would likely accelerate sales and put upward pressure on prices; renewed rate increases would further constrain affordability and activity.
• Macroeconomic shocks (recessionary pressure, rapid inflation changes, sudden labor market shifts) could alter demand quickly.
• Policy changes—such as tax changes, shifts in housing finance rules or local zoning reforms—can materially affect supply and demand dynamics.

For investors, these risks underline the need for stress-testing cash flows, being conservative on rent projections, and keeping liquidity reserves.

Practical checklist: how to act on Zillow’s 2026 outlook

Here are practical steps tailored to different actors in the market.

• Buyers:
  • Get mortgage pre-approval and understand how rate changes affect monthly payment.
  • Consider the time horizon: for short holding periods, flat prices multiply the importance of transaction costs; for long-term buyers, stability means less downside from near-term price moves.
• Sellers:
  • Price competitively to attract buyers who have more options; invest in targeted repairs that improve marketability.
  • If you can wait, monitor local inventory trends—selling into a tighter local market can still yield better outcomes.
• Investors:
  • Run conservative rent-growth and vacancy scenarios, especially for multifamily acquisitions.
  • Prioritise markets with limited new supply or strong job growth.
  • Factor in longer expected sales timelines when calculating returns.

How we interpret Zillow’s metrics: ZHVI and ZORI explained

• ZHVI (Zillow Home Value Index) is a typical-value measure that tracks representative home values over time. Zillow’s +0.9% projection is for the national typical home value by December 2026.
• ZORI (Zillow Observed Rent Index) measures typical rent changes; Zillow forecasts single-family rent growth of +1.1% and multifamily rent growth of -0.2%.

These are broad indicators; they do not replace local market analysis or property-level underwriting.

Bottom line for decision-makers

Zillow’s forecast points to a market that steadies in 2026: prices roughly flat, sales climbing modestly to 4.2 million, and rents diverging between single-family and multifamily units. That changes the rules of engagement:

• Buyers have a little more room to be selective without fearing rapid price jumps.
• Sellers should not expect strong price-driven leverage.
• Investors face slower rent momentum in multifamily assets but modest gains in single-family rentals.

We think the forecast is realistic given the current interest-rate context and construction pipeline. But the margin for error is meaningful—mortgage-rate moves and regional supply shifts can tilt outcomes.

Frequently Asked Questions

Q: Will home prices fall in 2026? A: Zillow projects home values to be largely unchanged, with typical home values up +0.9% by December 2026. That is not a broad national decline, but near-flat nominal growth.

Q: How much will existing home sales pick up? A: Zillow expects existing home sales to reach 4.2 million in 2026, a +3.9% increase from 2025. This is a modest recovery that still sits below historical averages.

Q: Should landlords expect strong rent growth? A: No. Zillow forecasts single-family rents to rise +1.1% while multifamily rents are expected to fall -0.2%, reflecting rising multifamily vacancies from new deliveries. Landlords will face limited pricing power in many urban multifamily markets.

Q: Does this forecast mean now is a bad time to buy? A: Not necessarily. If you are a long-term buyer, flat price expectations reduce the urgency to buy only for capital gains; financing and monthly payment affordability become the deciding factors. Short-term speculators may find less opportunity for quick gains.

Zillow’s baseline is a slow rebalancing: mortgage rates easing a bit, pent-up demand returning, and supply rising at a similar clip to demand. The concrete numbers to remember are +0.9% ZHVI growth, 4.2 million existing home sales, +1.1% single-family rents and -0.2% multifamily rents for December 2026 — and those figures should guide your planning and risk management.