Home Price Growth Rate Slows Below Inflation

The home price growth rate for 2026 is now expected to land at just 1.2 percent, according to Realtor.com's midyear forecast update. That's a notable step down from the 2.2 percent gain projected back in December, and it means home values are actually shrinking once inflation is factored in.

Inflation is projected to run at 3.4 percent this year, so a 1.2 percent bump in home prices leaves owners behind in real terms even as the broader housing market shows signs of life. Sales are expected to tick up modestly, and buyers are finding a bit more breathing room than they had a year ago.

At a Glance

• Home prices projected to rise just 1.2 percent in 2026, down from a 2.2 percent forecast in December
• Inflation is expected to hit 3.4 percent this year, outpacing home price gains
• Mortgage rates are holding at a projected 6.3 percent for 2026
• Existing home sales are forecast to reach 4.10 million, up 1.0 percent from 2025
• Private listing networks are a growing wildcard that could affect visibility and pricing

Why This Home Price Growth Rate Matters

A 1.2 percent gain sounds fine until you stack it against inflation running nearly three times as fast. That gap means the typical home is losing purchasing power even while its sticker price technically climbs. Danielle Hale, chief economist at Realtor.com, described the current landscape as one where sellers are resetting expectations and buyers are gaining leverage, which is a real shift from the frantic bidding wars of a few years back.

What Buyers Are Actually Paying

Here's the part that matters most if you're shopping: the typical monthly mortgage payment for a 2026 buyer is projected to run 1.9 percent below what buyers paid last year. That's a bigger drop than the 1.3 percent decline Realtor.com originally forecast. Pair that with rising incomes, and the share of a paycheck needed to cover housing costs is shrinking, even with mortgage rates parked where they are.

Sellers Are Getting Realistic Earlier

One of the more interesting shifts this year is behavioral. Sellers are pricing homes more conservatively from the start rather than listing high and cutting later. That's led to fewer price reductions showing up after listings go live compared to 2025. Hale framed it as a market where people are showing up and adjusting rather than walking away, and that willingness to meet buyers partway is what's keeping deals moving.

Quick Facts

• 2026 price growth forecast: 1.2 percent, down from 2.2 percent in December
• Projected inflation for 2026: 3.4 percent, a three year high of 4.2 percent hit in May
• Mortgage rates projected to hold at 6.3 percent for the year
• 10 year Treasury yield has stayed between 4 percent and 4.5 percent, keeping mortgage rates in the 6 to 6.5 percent band
• Existing home sales projected at 4.10 million, running 0.2 percent ahead of last year's pace so far

Why Mortgage Rates Aren't Budging

Rate relief that looked possible earlier in 2026 has stalled. Inflation and a labor market that keeps refusing to crack are offsetting whatever downward pressure existed on rates. Market expectations flipped after February strikes on Iran, according to Realtor.com, with traders now pricing in one to two rate hikes by December instead of the cuts they'd expected before that conflict. That's a meaningful reversal, and it's part of why the 6.3 percent mortgage rate forecast hasn't moved.

Sales Numbers Tell a Slow but Steady Story

Existing home sales are expected to hit 4.10 million for the year, a 1.0 percent increase over 2025, though that's a touch below the 4.13 million Realtor.com projected in December. The year started rough, with sales trailing 2025 levels in January, February and March, before stabilizing in April and picking up in May. Hale credited both buyers and sellers with what she called staying power this year.

The Private Listings Wildcard

Realtor.com is watching the continued spread of private listing networks, homes marketed away from the multiple listing service or public search portals, as something that could reshape the second half of 2026. There's not much evidence yet that private listings are moving sales or prices, but the effect might already be buried in inventory data. Hale warned that sellers who go private give up visibility and competition, which is usually what drives prices upward. For buyers, it means missing pieces of the market and less clarity on what a fair price actually looks like. As price growth cools and buyers regain some footing, that lack of transparency could become the thing to watch most closely heading into 2027.

Frequently Asked Questions

Will home prices increase in 2026?

Yes, but only slightly. Realtor.com projects a 1.2 percent increase for 2026, down from an earlier forecast of 2.2 percent, and that gain trails expected inflation of 3.4 percent.

Will home prices increase in 2025?

Realtor.com's data referenced sales running slightly ahead of 2025's pace, indicating that 2025 saw its own modest price and sales activity, though the current forecast update focuses on 2026 as the year of notably slower growth.

Will home prices increase in 2027?

Realtor.com's current forecast update doesn't provide a specific 2027 figure. Factors like private listing growth, mortgage rate trends and inflation will likely shape whatever forecast emerges closer to that year.

What is the home price growth rate?

The home price growth rate measures how much home values rise or fall over a period, typically a year. For 2026, Realtor.com projects that rate at just 1.2 percent nationally, well below inflation.

Will home prices increase in 5 years?

No specific five year projection was included in Realtor.com's midyear update. Near term trends suggest slow, single digit growth is more likely than sharp increases, assuming mortgage rates and inflation stay in similar ranges.