Mary Beth Eastman 
Key Takeaways
- Expect home prices to rise slightly, with a projected 1.2% increase year-over-year.
- Mortgage rates are likely to stay above 6%, remaining relatively stable (barring serious inflation changes).
- Experts say home sales will warm up in 2026, with 4.3% more homes selling this year than in 2025.
- Homeowners selling in 2026 should pay attention to both national and local market trends for speedy sales at a maximum price.
Last year’s chilled housing market is slowly thawing, and homeowners should expect to see a continuation of slow but steady appreciation in 2026, according to real estate experts. With mortgage rates expected to remain in the low 6% range this year – a slight cooling off from the multi-year highs we saw in 2025 – Zillow’s economic analysts are predicting a rise in demand and an overall increase in home sales this year
In our guide below, learn where home prices are headed in top U.S. housing markets, plus how 2026 mortgage rates and home sales could influence your decision to sell, refinance, or tap into your home’s equity – and what homeowners need to pay attention to as the year progresses.
Home Prices Will Rise, But Gently
Expect modest appreciation rates for your home in 2026. According to Zillow’s 2026 forecast, the national average increase in home values will be 1.2% over last year. For a $400,000 home, that’s a bump of $4,800 in value.
Compared to the pandemic era, which saw homes appreciating by as much as 23% year-over-year (as we saw in May 2021), 2025 home values remained relatively flat. Nearly half of the nation’s top 50 housing markets saw sales prices fall last year
In 2026, there should be fewer major markets with annual declines; Zillow analysts expect just 12 markets to see falling values this year compared to last year (mostly in the South and West). However, even though values have pulled back somewhat from their peak, most homeowners are still sitting on sizable gains in home equity.
What does this mean for homeowners?
- Fewer homeowners are likely to be underwater on their homes in 2026, meaning more homes should be valued at or above what they paid for it.
- If you’re planning home improvements this year, focus on upgrades with the best return on your investment, as ROI is more important when appreciation is mild.
- Selling in 2026 will lock in whatever gains (or losses) your home has experienced in your local market. If you’re looking for cash flow, tapping your equity instead leaves a path open for future appreciation.
Remember, pricing trends are general; what really matters is your local market. Your region may be bucking national trends, so compare local real estate values before planning your next move.
Relatively Flat Mortgage Rates Could Spur New Buyers
In what they’re calling a “gradual rate moderation,” economic forecasters at Zillow believe mortgage rates will stay above 6% throughout 2026.
If you’re considering selling, relatively flat mortgage rates for another year could actually spur more buyers, many of whom have grown impatient waiting for rates to fall. Buyers are also likely to pounce on brief rate drops to squeeze a little more value from their purchase.
“Even a small difference in rate can meaningfully shrink a monthly payment and expand the number of homes within reach,” said Kara Ng, senior economist at Zillow Home Loans, in a December statement. For sellers, that means tracking interest rates and listing quickly if you want to capitalize on rate moves, or preparing the home and improving its condition if price is the primary focus.
But homeowners who locked in ultra-low pandemic rates of between 2% and 4%, may continue to shun refinancing this year if mortgages rates don’t fall considerably. A recent Unlock survey found that 92% of homeowners wouldn’t consider a cash-out refinance unless rates dropped below 6%.
Click the video below to hear more about what Unlock Chief Marketing Officer Michael Micheletti is predicting for mortgage rates and home appreciation this year.
Expect To See Slightly Higher Home Sales
The combination of softer pricing trends and flat mortgage rate movement is likely to parlay into a slight uptick in home sales. Zillow expects an increase of 4.3% in home sales over last year. That means an estimated 4.3 million transactions, spurred by somewhat improved affordability for buyers.
“Buyers can shop without panic” in 2026, Ng said, with fewer prospective buyers dropping out of the market like they did in 2025.
This subtle hike in expected sales means sellers may see slightly more competition, which could be good for helping them find the right buyer. But don’t expect a super-heated bidding war and understand that preparation and a realistic pricing strategy will go a long way toward a successful sale in 2026.
Selling in 2026? How To Settle Your HEA
If you decide to sell your home in 2026, you can settle your home equity agreement with the sale.
You can settle your HEA at any time during the agreement term, which is 10 years with Unlock. To settle an Unlock HEA with a sale, you’ll pay the buyout amount listed in your agreement using proceeds from the sale.
Here’s a simplified breakdown of how it works:
- You’ll notify Unlock of your intent to sell
- Calculate the gross home value, which is typically the home’s sale price
- Determine how much your home improvements contributed to the home’s value (you get to keep this portion)
- Subtract any maintenance adjustments per your contract
- Multiply the result by the percentage you’ve agreed to share with Unlock
- Pay Unlock its share of the home’s value
- You keep the rest
You can learn more about settling a home equity agreement with Unlock, including alternative options, in Unlock’s Product Guide.
Conclusion
The main forecast for 2026? Better stability. Track housing market trends and run the numbers for your home and local market to make smart decisions about your property and your finances this year.
