Zillow’s Updated 12-Month U.S. Home Price Forecast Projects Muted 2026 Market Conditions

Economists at real estate platform Zillow have just released their latest updated 12-month home price forecast, projecting that U.S. home values — tracked by the benchmark Zillow Home Value Index — will change by -0.2% between May 2026 and May 2027.

This new projection represents a small downward adjustment from the firm’s two prior national 12-month forecasts: it called for a 0.1% gain in April’s update, and a 0.5% increase when it published its March outlook.

Right now, the Zillow Home Value Index puts current national U.S. home prices 0.8% higher than they were one year ago. Zillow’s most recent overall 12-month forecast, which pegs the total expected national change at -0.1%, predicts home price growth will stay near this current muted pace.

As long as national home price growth remains below the pace of U.S. wage growth (which currently sits at 3.5% annually), core housing market fundamentals will keep improving. The excess overheating that occurred during the pandemic-era housing boom is gradually smoothing out, and this dynamic supports gradual market healing. If this trend continues and mortgage rates do not spike unexpectedly, national housing affordability will also keep improving slowly over time.

Zillow’s national forecast is neither strictly negative nor aggressively bullish. Analysts expect the 2026 national housing market to stay soft, with affordability seeing minor gains as U.S. income growth outpaces growth in home prices.

With this national baseline in place, what type of regional variation in home price performance does Zillow anticipate over the next 12 months?