Affordability is on the table in 2026 for many major metros as cooling interest rates and home price appreciation open up the American Dream of homeownership to more buyers.
Zillow predicts that the monthly mortgage payment for a typical home with a 20% down payment will become affordable in 20 of America’s largest metros by December 2026, including Chicago, Atlanta, and Raleigh, NC.
And even cities not expected to become “affordable” by Zillow’s standards are expected to see improvement. Nearly every metro – excluding Hartford, CT, Zillow’s pick for hottest market of the year – should see cooling home prices, giving much-needed relief to buyers. That includes even for typically pricey markets like New York City and Los Angeles.
“This is what a small-wins year looks like for housing,” Zillow Senior Economist Kara Ng commented.
“Rising incomes, subdued price growth, and gradually easing mortgage rates would help buyers regain their footing while allowing homeowners to continue building wealth. These types of slow and steady affordability improvements are exactly what the housing market needs over the long run.”
These projections are based on Zillow’s 2026 outlook, which predicts rates will end the year near 6%, home values will grow by just 1.9%, and incomes will rise 3.3%.
Should all these factors play out, Americans locked out of the housing market in recent years should gain significant buying power.
Raining on Zillow’s parade are down payments, which borrowers are struggling to save up for. Older buyers and previous homeowners tend to put down 19% or more, but for first-time buyers, the average is far lower.
Still, prospective buyers with any down payment can benefit from cooling house prices and low rates.
Americans are already stepping back into the housing market. Existing-home sales jumped 5.1% in December, with all four regions seeing improvement.
