Housing affordability to improve as home price growth cools, Realtor.com forecasts

The Inflation Gap Is Your New Best Friend

The core development is a decoupling of price growth from inflation. A 1.2% rise in list prices against a backdrop of higher inflation means your purchasing power is eroding slower than the asset's nominal value. In real, inflation-adjusted terms, prices are declining. This isn't a market crash, but a fundamental recalibration. Sellers, according to Realtor.com's senior economist, are resetting expectations, which directly translates to improved negotiating power for buyers. The era of bidding wars and waived inspections is losing its fuel.

The Mortgage Lock-In Persists, But the Cost Burden Eases

Here's the paradox: mortgage rates are projected to hold steady at 6.3%, the same level as the end of 2025. The hoped-for rate cuts, undercut by persistent inflation concerns, aren't materializing. Yet, the forecast projects the average monthly mortgage payment to decline 1.9% year-over-year. How? The slower price appreciation is doing the heavy lifting. This is pure yield drag for homeowners expecting rapid equity gains, but a tangible affordability boost for new buyers. The question you need to ask is whether a 1.9% monthly savings outweighs the opportunity cost of locking in a 6.3% rate versus potential future cuts. That's a personal calculation, not a market prophecy.

Sales Volume Stagnates, Inventory Trickles In

Don't mistake affordability for a buying frenzy. Existing home sales are forecast to rise only marginally, from 4.06 million in 2025 to an estimated 4.1 million this year—lower than initially expected. Meanwhile, inventory growth is slowing sharply, now projected at 3.6% year-over-year versus the original 8.9% forecast. This isn't a flood of supply meeting pent-up demand. It's a thin, deliberate trickle. For investors, this means the transaction volume that drives commissions and market liquidity remains subdued. The market is adjusting, not surging.

The binary choice for your portfolio is clear. If you believe this cooling trend is the precursor to a more significant correction, you hold cash and wait for a steeper discount. If you view it as a healthy normalization creating a entry point before the next leg of long-term appreciation, you act on the improved negotiating leverage. The data points to stability, not momentum. Decide which scenario you're allocating capital against.