Small investors get a rare break as US home prices lose ground to inflation

The typical monthly mortgage payment for a 2026 buyer is now projected to land 1.9% below last year’s level, a bigger improvement than the 1.3% drop forecast in December. That gain reflects steadier mortgage rate expectations paired with softer price growth, and comes alongside stronger wage growth, meaning housing now claims a smaller slice of the average paycheck than previously modeled.

However, Realtor.com held its mortgage rate forecast at 6.3% for the year, unchanged from December, after a mix of sticky inflation and a resilient labor market erased rate relief seen earlier in 2026.

Inflation reached a three-year high of 4.2% in May, and the Federal Reserve’s June statement, its first under chair Kevin Warsh, reinforced its commitment to price stability. Markets had been pricing in one to two rate cuts by year-end before February strikes on Iran; they now anticipate one to two hikes instead, though the 10-year Treasury yield has stayed within a 4% to 4.5% band, keeping mortgage rates broadly range-bound.

Softer sales

Existing-home sales are forecast to reach 4.10 million for 2026, a 1.0% annual gain but below Realtor.com’s earlier projection of 4.13 million. Sales lagged year-ago levels across the first quarter before steadying in April and strengthening through May, leaving year-to-date volume just 0.2% ahead of 2025.

“Buyers and sellers have shown a lot of staying power this year,” Hale said. “This is a market where people are adjusting and showing up rather than giving up. Sellers are meeting the market with more realistic asking prices, which is helping deals get done.”