Americans trying to decide whether to buy or sell a home are confronting a housing market reshaped by sharply higher mortgage rates, a shift increasingly tied to global instability.
The ongoing Iran war and the partial closing of the Strait of Hormuz have pushed up energy costs, rattled bond markets, and fueled inflation pressures that keep long‑term borrowing costs elevated.
Those dynamics are now filtering directly into housing, where buyers and sellers are watching for any signal of relief as volatility persists.
Mortgage rates are elevated compared to most of the past 10 months, but it’s important to note that the daily average mortgage rates are the lowest they’ve since May 14, according to Mortgage News Daily (MND).
“In terms of nuts and bolts, top-tier 30-year fixed rates fell to 6.59% for the average lender, down from 6.61% yesterday and from 6.75% last Tuesday,” Mortgage News Daily wrote on May 28.
The weekly 30-year fixed-rate mortgage (FRM) was 6.53%, Freddie Mac reported, also on May 28.
Real estate technology company Zillow has a new forecast that suggests a major change in housing market conditions, arriving at a moment when households are eager for clarity about what comes next.
The outlook follows an earlier analysis from Redfin, which, as I reported on May 14, predicted a significant shift in buyer behavior and inventory trends.
Zillow predicts home sales will be slower than expected
Affordability is still stronger than it was a year ago, but the recent rise in mortgage rates has chipped away at the gains homebuyers briefly saw when income growth outpaced home‑price increases and borrowing costs hovered near 6%.
Those conditions had offered a short window of relief, yet the latest rate pressures have narrowed that gap again. As a result, some of the optimism that had been building as the market looked ahead to 2026 has started to fade, according to Zillow.
“We previously noted that the housing market’s ‘uncooling’ would depend heavily on how long the energy and rate shock lasted,” Zillow Economic Research team senior economist Kara Ng recalled.
Zillow’s Ng offered a prediction.
“With the geopolitical conflict now dragging on for a couple of months, sales are still likely to exceed last year’s levels, but our forecast for transaction growth has been revised down by roughly one-third,” she wrote.
“Zillow’s research shows that home sales have rebounded most in markets where supply has surged, underscoring a simple constraint: buyers can’t purchase homes that aren’t listed,” Zillow added.
“That becomes a concern if elevated rates cause would-be sellers to delay listing as they become re-locked into their current mortgage rates.”
Zillow forecasts annual home sales to rise 1.2%
Given the current outlook for energy costs and inflation, Zillow is adjusting its projections.
Home sales are now expected to rise 1.2% year over year in 2026, according to Zillow, while its forecast for home‑value growth has been reduced to 0.1% over the same period, the real estate technology company reported.
“While everyone would like to see stronger sales volume this year, and this recent run-up in mortgage rates has contributed to worsening the affordability climate, most of the drag in volume is still the long-run affordability challenges that have been growing since we stopped building following the Global Financial Crisis, and since home prices rose rapidly following the pandemic,” Zillow Group chief industry development officer Mishca Fisher wrote.
More on personal finance:
- AARP raises red flag on major 401(k) problem
- Redfin predicts key housing market shift for homebuyers
- Fidelity sounds alarm on 401(k)s, IRAs, Social Security
Specifically, the Zillow annual forecast for 2026 involves these projected metrics:
- Typical home value growth is projected to rise 0.1% annually by December 2026.
- Existing home sales under Zillow’s sales count nowcast are expected to reach 3.8 million, reflecting 1.2% year‑over‑year growth.
- Existing home sales measured by the National Association of Realtors (NAR) are forecast to total 4.1 million, a 0.5% increase from the prior year.
- Typical single‑family rent growth is anticipated to rise 3.2% annually as of December 2026.
- Typical multifamily rent growth is expected to increase 2.1% annually by December 2026.
(Source: Zillow)
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U.S. Census Bureau releases April 2026 home sales report
For context, let’s look at some new April data we are seeing for the first time on May 28.
Sales of new single‑family homes reached a seasonally adjusted annual pace of 622,000 in April 2026, based on new estimates from the U.S. Census Bureau and the Department of Housing and Urban Development.
That figure represents a 6.2% decrease (±12.8%) from March’s revised rate of 663,000. It also stands 11.3% lower (±11.5%) than the level recorded in April 2025, the Census Bureau reported.
“The seasonally-adjusted estimate of new houses for sale at the end of April 2026 was 489,000,” the Census Bureau wrote. “This is 1.7 percent (±1.2 percent) above the March 2026 estimate of 481,000, and is 2.2 percent (±3.9 percent) below the April 2025 estimate of 500,000.”
“This represents a supply of 9.4 months at the current sales rate,” the government agency added. “The months’ supply is 8.0 percent (±16.3 percent) above the March 2026 estimate of 8.7 months, and is 9.3 percent (±13.5 percent) above the April 2025 estimate of 8.6 months.”
Related: Redfin predicts major housing market shift for homebuyers