Keep pulling the thread on Zillow Home Value Index.
Zillow predicts that housing will become more affordable in 20 of the 50 largest U.S. metropolitan areas by the end of 2026.
The typical home nationwide is valued at $359,078, according to the Zillow Home Value Index.
Zillow predicts Hartford will be the only major metropolitan area where housing affordability worsens in 2026 and has named it the "hottest market" for the year.
Zillow expects home values to rise in 41 of the 50 largest U.S. metropolitan areas, including Chicago, Atlanta, and Raleigh.
In a poll of 716 people conducted by Jackie Baker, 80% of respondents said a 6% mortgage rate was not low enough to motivate them to buy a home in 2026.
Zillow's forecast for improved nationwide housing affordability is based on expectations of slow home value growth, falling mortgage rates, and rising incomes.
U.S. housing affordability reached an all-time low in October 2023, when a typical mortgage required 38.2% of the median household income.
As of October 2023, homes were affordable to buy in only 7 of the 50 largest U.S. metropolitan areas.
A mortgage payment on a typical U.S. home currently takes 32.6% of median household income, the best affordability level seen since August 2022.
Zillow forecasts that the portion of median income required for a mortgage will improve to 31.8% by the end of the year.
Zillow's housing forecast assumes mortgage rates will fall to near 6% by the end of the year.
Zillow's forecast assumes U.S. home values will grow by 1% this year.