Weekly Real Estate News
Summary
Zillow has cut its late-2026 home-sales outlook as mortgage rates remain elevated, now forecasting a 3.5% year-over-year decline in its fourth-quarter existing-home sales measure. At the same time, Zillow raised its multifamily rent-growth forecast to 2.1%, underscoring a shift in momentum from the for-sale market toward rentals.
Zillow has turned more cautious on the closing months of 2026, cutting its outlook for existing-home sales while raising its expectations for rent growth as elevated mortgage rates continue to reshape the housing market.
In its September housing forecast, released Sept. 18, Zillow said it expects its measure of existing-home sales to decline 3.5% from a year earlier in the fourth quarter. Using the National Association of Realtors’ existing-home sales measure, Zillow projects a 2.8% year-over-year decline.
The change matters because it is not simply another weak monthly reading. It represents a meaningful retreat from the recovery Zillow expected when 2026 began. The company entered the year projecting a 4.7% fourth-quarter increase in existing-home sales and an average fourth-quarter mortgage rate of 6.07%. Instead, borrowing costs have moved in the opposite direction.
Freddie Mac’s weekly survey put the average 30-year fixed mortgage rate at 6.95% for the week ending Sept. 17, up from 6.76% a week earlier. That has kept affordability under pressure even as buyers gain more negotiating leverage from rising inventory.
Inventory is rising while sales weaken
Zillow now expects inventory to be 10.1% higher year over year in the fourth quarter, more than twice the growth rate seen at the start of the year. More homes for sale would ordinarily support transaction activity, but the combination of high mortgage rates, elevated prices and economic uncertainty is keeping many buyers on the sidelines.
For the full year, Zillow still expects some improvement over 2025. Its own sales count forecast calls for 3.766 million existing-home transactions in 2026, up 1.2% from last year. On NAR’s measure, Zillow projects 4.08 million sales, a 0.5% annual increase.
That distinction is important. Zillow is not forecasting a collapse in annual sales. It is forecasting that momentum will deteriorate into year-end after earlier hopes for a more durable recovery.
Rental outlook moves the other way
The rental market is moving in the opposite direction. Zillow raised its fourth-quarter forecast for multifamily rent growth to 2.1% year over year from 1.9% a month earlier. At the beginning of 2026, the company expected fourth-quarter rent growth of just 0.3%.
For the full year, Zillow expects typical single-family rents to rise 2.9% and multifamily rents to increase 1.7%.
The widening gap between the for-sale and rental outlooks illustrates how mortgage rates can redirect housing demand. Households that postpone a purchase still need somewhere to live, supporting rental demand even as purchase transactions weaken.
Buyers have leverage, but affordability still rules
There is one clear advantage for buyers who can qualify and absorb today’s financing costs: negotiating power. More inventory and more price cuts mean shoppers have choices that were largely absent during the pandemic-era housing frenzy.
But bargaining power does not erase the payment problem. A buyer can negotiate a lower price or seller concession and still face a monthly payment that is difficult to carry when mortgage rates are near 7%.
Zillow expects typical home values to finish 2026 up 1.2%, suggesting the company’s baseline remains a slow, constrained market rather than a broad national price correction.
For housing professionals, the important shift is the direction of travel. The expected 2026 recovery has weakened substantially, inventory is rebuilding faster than demand, and rental housing is gaining relative strength. Unless mortgage rates retreat meaningfully, the fourth quarter is increasingly shaping up as another test of how long buyers and sellers are willing to wait each other out.
