AriZona Real Estate insider!

As we head into 2026, Zillow has just dropped its latest housing market forecast — and it paints a picture of a market that’s finally finding its balance again. After several years of volatility, rapid swings in mortgage rates, and tight inventory, Zillow is calling for a “soft landing” in 2026. But before we look ahead, it’s worth asking an important question: How accurate was Zillow’s 2025 forecast?

Surprisingly, they were more on target than many expected.

How Zillow’s 2025 Forecast Held Up

Zillow predicted that 2025 would be a year of modest growth, rising inventory, and a market that slowly shifted back toward buyers. Looking back now, they were largely correct.

Home Prices

Zillow projected home values would rise around 2.6% in 2025. The year ended with roughly 2–3% appreciation nationally — almost exactly in line with their call. No boom, no bust, just slow, steady growth.

Home Sales

They expected about 4.3 million existing home sales. The final number came in slightly lower, but still within the same range. Given the rate volatility we saw, this was a solid prediction.

Mortgage Rates

Zillow warned that rates would be “bumpy” — rising, falling, and rising again. That’s exactly what happened. Rates flirted with 7%, then dropped sharply below 6% heading into 2026. The path was messy, but the pattern matched their forecast.

Inventory

This is where Zillow was spot‑on. They predicted inventory would loosen up, and it did. In fact, 17 states — including Arizona — are now back above their pre‑pandemic 2019 inventory levels. That shift alone has changed the tone of the market.

Overall, Zillow’s 2025 forecast was one of their more accurate years, which gives their 2026 outlook a bit more weight.

What Zillow Expects in 2026

Zillow’s 2026 forecast calls for a market that continues to warm up — not overheated, but healthier and more balanced than what we’ve seen since the pandemic.

Home Values: +1.2%

Zillow expects national home values to rise about 1.2% in 2026. That’s modest, but it’s also a sign that the market is stabilizing rather than correcting.

Home Sales: Up 4.3%

With mortgage rates easing and more inventory available, Zillow expects more buyers to re‑enter the market. Sales should tick up, even if affordability remains a challenge in some areas.

Mortgage Rates: Staying Above 6%

Even with the recent dip below 6%, Zillow believes rates will hover above that mark for most of 2026. The days of 3% mortgages aren’t coming back anytime soon, but buyers are adjusting to the new normal.

Inventory: Continued Improvement

Builders are slowing down, but existing‑home inventory is expected to keep rising. More choices for buyers, less pressure on prices — a welcome shift.

What About Phoenix and Arizona?

Zillow’s national forecast lines up closely with what we’re seeing here in Arizona.

• Inventory is back above 2019 levels, giving buyers more leverage than they’ve had in years.
• Price growth is expected to be modest, not explosive.
• Phoenix’s one‑year home value forecast sits around +4%, which is stronger than the national average but still far from the double‑digit gains of the pandemic.
• Homes are taking longer to sell, and more sellers are adjusting prices or offering concessions.

For buyers, this means more breathing room. For sellers, it means pricing strategy matters again. For investors, it’s a return to fundamentals rather than speculation.

Final Thoughts

Zillow’s 2026 forecast points to a calmer, more predictable housing market — something we haven’t had in a long time. And given how accurate their 2025 predictions turned out to be, their outlook for the year ahead is worth paying attention to.

If you’re thinking about buying, selling, or investing in 2026 — especially here in Phoenix — this is the kind of environment where smart strategy makes all the difference. And I’m always here to help you navigate it.