Home Price Growth Rate Slows Below Inflation

The home price growth rate is on pace to hit its slowest mark in years, with Realtor.com's midyear forecast now projecting just 1.2 percent appreciation nationally in 2026. That figure trails projected inflation of 3.4 percent, meaning home values are effectively losing ground in real terms even as sales tick up slightly for the year. The updated number is a notable step down from the 2.2 percent growth forecast Realtor.com issued back in December.

At a Glance

• 2026 home price growth forecast: 1.2 percent, down from 2.2 percent projected in December
• Projected inflation for the year: 3.4 percent, outpacing home price gains
• Existing home sales expected to reach 4.10 million, up 1.0 percent from 2025
• Mortgage rates projected to hold near 6.3 percent for 2026
• Real estate proxy VNQ trading at 96.80, down 1.63 percent, within its 52 week range of 93.67 to 99.15

Why Real Terms Matter More Than Sticker Prices

A 1.2 percent nominal gain sounds modest but harmless until you compare it against inflation running at 3.4 percent. That gap means the actual purchasing power tied up in a home is shrinking, even if the number on the listing goes up. For a market that spent much of the last decade defined by rapid appreciation, this marks a genuine shift in tone.

What Buyers Are Actually Paying

There is a silver lining for shoppers. Realtor.com now projects the typical 2026 buyer's monthly mortgage payment will land 1.9 percent below what buyers paid a year earlier, a steeper drop than the 1.3 percent decline originally forecast. Paired with wage growth, that means housing is claiming a smaller slice of household income than it did in 2025, even with mortgage rates holding steady rather than falling.

Sellers Are Reading the Room Earlier

Instead of listing high and cutting prices weeks later, sellers this year are setting more realistic asking prices from the start. Realtor.com says that shift has led to fewer price reductions than in 2025 and has helped smooth out negotiations. Danielle Hale, the firm's chief economist, described it as a market where participants are adjusting and showing up rather than giving up, with sellers meeting buyers closer to where the market actually sits.

Quick Facts

• Inflation hit a three year high of 4.2 percent in May 2026
• The 10 year Treasury yield has ranged between 4 and 4.5 percent this year
• Mortgage rates have stayed in the 6 to 6.5 percent band
• Markets now anticipate one to two rate hikes by December, a reversal from earlier expectations of cuts

Rates Stuck Despite Earlier Hopes

Mortgage rate projections have not budged from 6.3 percent for the year, as sticky inflation and a labor market that refuses to soften offset the lower rates seen briefly earlier in 2026. Expectations for Federal Reserve action flipped after February strikes on Iran rattled markets, according to Realtor.com, shifting the outlook from one to two rate cuts to one to two hikes by year end.

Sales Pick Up After a Sluggish Start

Existing home sales are projected to hit 4.10 million for 2026, a 1.0 percent increase over last year, though that is slightly below the 4.13 million Realtor.com forecast in December. Sales lagged year ago levels in January, February and March, stabilized in April, and climbed in May. Year to date, sales are running 0.2 percent ahead of last year's pace, which Hale attributed to staying power among both buyers and sellers.

The Private Listings Wildcard

One factor Realtor.com is watching closely for the second half of the year is the continued growth of private listing networks, homes marketed away from the multiple listing service or public search portals. There is not yet strong evidence these listings are moving sales figures or prices, though their fingerprints could already be showing up in inventory counts. Hale warned that sellers who go private trade away the visibility and buyer competition that typically pushes prices higher, while buyers lose the ability to see the full market, making it harder to judge what a fair price looks like. As the second half of 2026 unfolds, that trend, alongside steady rates and cautious sellers, will likely shape whether this cooling period turns into something more lasting.

Frequently Asked Questions

Will home prices increase in 2026?

Yes, but only modestly. Realtor.com projects 1.2 percent nominal price growth for 2026, which is below the 3.4 percent inflation rate expected for the year.

Will home prices increase in 2025?

Realtor.com's data shows 2025 as a year of slower appreciation compared to prior years, with the 2026 forecast representing a further slowdown from that pace.

Will home prices increase in 2027?

The source data does not provide a specific 2027 forecast. Current trends suggest growth will depend heavily on inflation, mortgage rates and how private listing networks affect market visibility.

What is the home price growth rate?

Nationally, Realtor.com projects a 1.2 percent home price growth rate for 2026, down from an earlier December forecast of 2.2 percent.

Will home prices increase in 5 years?

Long term price direction depends on factors like inflation, mortgage rates and housing supply that are difficult to predict five years out, and current data only covers near term forecasts through 2026.