A mortgage payment on a typical home is forecast to be “affordable” in 20 major metropolitan areas by the end of the year, according to the latest market report from Zillow. That’s the most markets since 2022.
Zillow expects slow but steady home value growth, falling mortgage rates and rising incomes to contribute to a nationwide improvement in affordability this year. “Affordability” in this case means a mortgage payment on a typical house that doesn't require more than 30% of the median household income. When housing costs rise above that 30% threshold, they become a financial burden, leaving less in the budget for other essentials, such as groceries and transportation, Zillow economists said. (The only major metro market where affordability is expected to worsen in 2026 is Hartford, Conn., which Zillow nevertheless predicts will be the country's hottest market in 2026.)
Key assumptions in place for this forecast are that mortgage rates will fall to near 6%, where Zillow expects them to be at the end of the year; that home values grow by 1.9%, with the typical U.S. home value ending the year at $365,795; and that incomes rise by 3.3% this year based on Bloomberg consensus estimates.
"This is what a small-wins year looks like for housing," said Kara Ng, Zillow’s senior economist. "Rising incomes, subdued price growth and gradually easing mortgage rates would help buyers regain their footing while allowing homeowners to continue building wealth. These types of slow and steady affordability improvements are exactly what the housing market needs over the long run.
Read more about the forecast here.
