Home prices effectively decline as inflation outpaces growth: Realtor.com

For potential homebuyers worried about the elevated pace of inflation, a silver lining can be found. Home price growth in 2026 is now expected to slow to just 1.2%, which is well under Realtor.com’s original 2.2% forecast, and behind the pace of inflation.

According to the real estate listing company’s midyear update to its 2026 housing forecast, this means home prices are effectively declining, thus easing the cost burden for buyers.

Realtor.com also revised its previous existing-home sales forecast down to 4.1 million units for 2026. In December, the company had projected sales of 4.13 million existing homes this year.

Despite the downward revision, the new forecast would represent a 1% increase from the 4.06 million units sold in 2025.

“Against a backdrop of both familiar and new challenges, the economy has proved resilient. As a result, the first half of 2026 delivered stability more than momentum in the housing market,” commented Danielle Hale, chief economist at Realtor.com, in a press release announcing the update.

“The housing market is inching forward as sellers reset expectations, price growth cools and buyers gain more negotiating power,” she added. “Looking ahead, we expect momentum to build through the second half of the year as more sidelined buyers and sellers find terms that work for both sides.”

Realtor.com also revised its forecast for the inventory of existing homes for sale. In December, it had predicted an 8.9% year-over-year increase, but the revision has brought that down to 3.6%.

The projection for 30-year mortgage rates remains at 6.3%. The analysis says that markets had priced in one or two Federal Reserve rate cuts in 2026, but that was before the U.S. and Israel commenced attacks on Iran.

The Fed’s preferred inflation index rose 4.1% annually in May — a three-year high — after which new Fed Chair Kevin Warsh promised to deliver price stability. Markets “now expect one to two hikes instead — a nearly full-point swing resulting from the [Iran] conflict’s effect on oil and inflation,” Realtor.com stated.

On the bright side for consumers, rents are expected to drop 1.2% in 2026, assuming supply keeps pace with rental demand.

“If supply keeps pace with, or outpaces, demand, rents should continue to soften,” Realtor.com observed. “If construction slows before demand catches up, the relief could stall or reverse.”