Zillow just told home buyers and sellers what many already feel. 2026 is going to be a slow year for home sales.
The firm cut its full-year existing-home sales forecast to about 0.5% growth. That is close to flat.
It also sees home prices staying near level for the year.
The main driver is the rate lock-in effect. Most homeowners have mortgages at rates well below today's level.
That means they do not want to sell and take out a new, higher-rate loan. So fewer homes come to market.
Low listings mean low sales, even when buyer interest picks up.
Inventory is up from a year ago. That is good news.
But the rise is from a very low base. The number of homes on the market is still well below what was normal in 2018 or 2019.
A slow rise in listings does not fix the sales drought. It just chips at it.
Flat prices are a shift from the big gains of 2020 and 2021. They also reflect a market that cannot decide which way to go.
Some cities are seeing small price cuts. Others are still climbing.
The national number masks a wide spread between regions.
Zillow flagged two clear trends.
The Sunbelt is softening. Places like Austin, Tampa, and Phoenix got too much supply and see prices stall or dip.
The Midwest is more steady. Cities like Columbus, Des Moines, and Indianapolis have less supply and tighter buyer demand.
For sellers, the Midwest looks safer. For buyers, the Sunbelt gives more choice.
For buyers, the Zillow read is neither great nor bad. Rates are still high, prices are stable, and the choice is growing.
The best buy windows tend to open when rates drift down. If rates fall in late 2026, buyer power can jump fast.
Until then, the buyer has time. There is less pressure to act now than at any point since 2020.
For sellers, the math is tougher. Flat prices mean small gains, and a slow market means longer sale times.
Homes that show well and price right still sell. Homes that are priced aggressive can sit for months.
A big price cut at the start often beats a slow chain of small ones.
Two forces could lift the 2026 outlook. The first is a real drop in mortgage rates. The second is a wave of new listings from owners who give up on waiting.
Fannie Mae is forecasting sub-6% rates by year-end. If that plays out, the Zillow forecast starts to look too low.
Listings are also starting to rise, even at high rates. If that keeps going, sales can pick up even before rates fall much.
Home builders have a split view. Flat prices are tough on new construction margins, but rising inventory helps them clear backlogs.
Most big builders are trimming new starts for 2026. That limits how much extra supply hits the market.
It also keeps prices from falling much further.
A near-flat year for home sales is not a crash. But it is not a thaw either.
The housing market is still stuck in its mix of high rates and low listings.
Zillow just put a number on that fact.