Zillow predicts new 2026 change in US housing market, real estate

Prospective homebuyers may finally have the opportunity to catch a bit of relief.

Real estate technology company Zillow has a new January 2026 Market Report showing that the typical monthly mortgage payment is now 8.4% lower than it was a year ago.

The average rate on a 30‑year fixed mortgage reached 6.11% on Feb. 5, edging up from 6.10% the previous week, according to Freddie Mac. At this point last year, that same loan type sat at 6.89%.

For 15‑year fixed mortgages, the average rate came in at 5.50%, a slight uptick from 5.49% a week earlier. One year ago, the 15‑year option was notably higher at 6.05%.

Related: Warren Buffett's Berkshire Hathaway predicts real estate shift

And after several tough years for affordability, 2026 is shaping up to bring a slow but meaningful turnaround — one that could open the door for people who’ve been waiting for the right moment to jump in.

U.S. home values declined again in January, marking the sixth straight month of month‑to‑month decreases, based on the Zillow Home Value Index.

As a reporter for TheStreet covering real estate and the housing market, I observed and wrote about the past three years of exceptionally low activity, with sales stuck near the botttom and affordability remaining a persistent challenge.

But the new housing market report from Zillow forecasts some positive signs for the upcoming spring.

Zillow predicts new improvement in the housing market

Based on current trends, Zillow Group chief economist Mischa Fisher offered a housing market prediction for the next few months.

"The 2026 forecast for both sales and affordability is one of gradual improvement," Fisher wrote. "January was a cautious first step along that path, as winter weather impacted many major markets."

"With the storms seemingly in the rearview mirror, sales volume is expected to bounce back as we approach spring."

Home values and mortgage payments

• The typical U.S. home is valued at $358,968, according to Zillow.
• The Zillow Home Value Index (ZHVI) declined 0.4% from December to January, though values remain 0.2% above where they were a year ago.
• A standard monthly mortgage payment on a typical home is $1,733 with a 20% down payment, excluding taxes and insurance. This is 8.4% lower than it was last year.

Housing inventory

• Nationwide housing inventory reached 1.11 million homes in January, Zillow reported.
• The number of active listings was 6% higher than at the same time last year, though it dipped 0.1% compared with December.

Home sales

• An estimated 219,644 homes changed hands in January, based on Zillow’s preliminary sales nowcast. This represents a 4% decline from the same month last year and a 26.4% drop compared with December. These numbers are scheduled for revision mid‑month.
• Newly pending listings — which track properties moving from active to pending status rather than completed sales — rose 1.8% year over year and increased 20.8% from December.

Home price competition

• Homes spent a median of 47 days on the market before going under contract in January, which is eight days slower than a year ago and four days slower than in December, according to Zillow.
• In January, 22% of listings experienced a price reduction. This share was 0.7 percentage points lower than a year earlier but 5.2 points higher than in December.
• In December, the most recent month with complete data, 22.4% of homes sold for more than the asking price. That share was 2.3 percentage points below last year and 1.6 points below November.

Redfin forecasts mortgage rates to hold steady

President Donald Trump said Friday that he has selected bank executive Kevin Warsh to take over as Federal Reserve chair, replacing Jerome Powell.

Real estate technology company Redfin sees that choice as an indication that mortgage rates will hold steady in the near future.

"The president’s choice to nominate Kevin Warsh is a 'business as usual, pick who should inspire confidence from markets and his colleagues," wrote Chen Zhao, head of economics research at Redfin. "The housing market should expect mortgage rates to hold steady; this nomination won’t push rates up or down."

More on mortgages, housing market:

• Zillow sounds alarm mortgage rates, housing market
• Berkshire Hathaway HomeServices predicts housing market pivot
• Redfin sends strong message on mortgage rates

Redfin explains its view that the housing market has been largely stagnant lately, held back by worries about employment conditions, ongoing affordability challenges, and uncertainty around future policy decisions.

"Buyers have backed off despite lower mortgage rates because the economic backdrop has deteriorated and sellers have backed off, too, because the demand isn’t there," Zhao explained.

"Guiding the economy along to a soft landing where the labor market stays intact, inflation remains controlled, and consumers feel less uncertain would boost the housing market."

Related: Zillow reveals U.S. city with top housing market for homebuyers