Zillow sees housing shift as home values flatten, sales rise
Zillow sees a meaningful shift in U.S. real estate: home values are barely moving while sales activity picks up. The company's latest outlook now projects national home values to rise just 0.3% in 2026, down sharply from earlier forecasts, even as improved mortgage spreads help keep existing home sales positive year over year.
Real estate technology firm Zillow has trimmed its 2026 expectations as high borrowing costs and rising inventory reshape the market. TheStreet reports that Zillow now expects existing home sales to grow only 0.5% for the year, a steep cut from the 3.4% gain it projected in March. Mortgage rates remain above 6%, pressuring affordability even as values stall.
Key Takeaways
- Zillow now forecasts U.S. home values to rise just 0.3% in 2026, reflecting a near-stagnant national market.
- Existing home sales are still positive year over year, helped by mortgage spreads keeping rates below 6.75%.
- Southern California sales jumped in June—Los Angeles up 6.6% and San Diego up 12.5%—while price gains slowed.
- Sellers face smaller equity gains; buyers who can qualify may find more negotiating room than in recent years.
What Is Zillow Saying About Home Values in 2026?
According to TheStreet's coverage of Zillow's April 2026 Home Value and Homes Sales Forecast, the national typical home value is expected to increase by just 0.3% by year-end. Zillow analysts cited high borrowing costs as a drag on demand and noted that inventory is expected to grow throughout 2026.
The revision marks a notable downgrade. In March, Zillow projected existing home sales would climb 3.4% year over year; that figure has since fallen to 0.5%. For homeowners and luxury buyers tracking long-term equity, stagnant values mean slower wealth building than the rapid post-pandemic gains.
Why Are Home Sales Still Rising Despite Flat Values?
HousingWire data offers a counterpoint: better mortgage spreads are keeping transaction volume alive. The spread between 30-year mortgage rates and the 10-year Treasury yield fell to 2.01% recently, helping hold mortgage rates near 6.60% rather than above 7%.
Weekly pending home sales totaled 71,173 versus 66,967 a year ago, and total pending sales reached 422,130 compared with 396,652 in 2025. Analyst Logan Mohtashami argues that without those tighter spreads, rates would have topped 7%—a level that historically softens housing demand. Purchase applications have posted positive year-over-year growth in 23 of 26 tracked weeks in 2026.
For more context on how premium markets navigate these cycles, see our Luxury Real Estate & Dream Homes coverage.
How Is Southern California Reacting?
The Korea Daily reports that Southern California closed the first half of 2026 on a strong note. Los Angeles metro residential sales volume rose 6.6% year over year in June, while San Diego jumped 12.5% and Riverside climbed 7.0%.
Price appreciation has cooled sharply. The typical Los Angeles home value reached $965,867—a 0.6% annual gain and just 0.2% month over month. Freddie Mac data cited in the report shows the benchmark 30-year fixed rate roughly 20 basis points lower than a year ago, coaxing sidelined buyers back into the market.
What Does This Mean for Buyers and Sellers?
TheStreet characterizes the outlook as a mixed bag. Buyers who can afford today's mortgage rates may benefit from flat prices and modestly easing financing costs. Sellers, especially in luxury tiers, should expect less aggressive bidding and smaller-than-hoped sale prices.
Zillow Group chief industry development officer Mischa Fisher noted that long-run affordability challenges—not just current rates—remain the primary drag on volume. Full details on spread dynamics are available in HousingWire's latest market tracker.