The biggest surprise of 2026 is not that the housing market has slowed, according to Veros Real Estate Solutions. It is that the housing market continues to hold its ground.
Veros Real Estate Solutions has released its Q2 2026 VeroFORECAST, projecting that U.S. home prices will rise just 1.1 percent over the next 12 months.
The biggest surprise of 2026 is not that the housing market has slowed, according to the Veros report. It is that the housing market continues to hold its ground.
Housing activity remains well below the pace of the pandemic years, but the collapse many expected has never materialized, according to Veros. Instead, the market has settled into an uncomfortable equilibrium where buyers and sellers are both frustrated, yet neither has enough incentive to fundamentally change the market’s direction.
“The first half of 2026 offered no shortage of reasons for housing to weaken further. The Iran war briefly sent oil prices sharply higher, reigniting inflation concerns and pushing long-term interest rates upward,” Veros stated in its report. “Financial markets braced for another spike in mortgage rates. Instead, borrowing costs remained below where they were a year earlier, allowing housing demand to modestly outperform 2025. Buyers have not abandoned the market; they simply cannot participate as easily as they once could.”
Affordability remains the defining problem, according to the report.
Mortgage rates continue to hover in the mid-6 percent range, better than last year but far above the levels that fueled the housing boom. Meanwhile, price appreciation has slowed, but that doesn’t make homes affordable when prices are already elevated.
The affordability problem extends beyond housing. Inflation reached 4.2 percent year-over-year in May, and although price pressures are expected to ease, inflation is still likely to remain above the Federal Reserve's 2 percent target.
“Consumers are not just paying more for homes. They are paying more for nearly everything else, from insurance and utilities to food and transportation,” the report pointed out. “Supply has improved, but not enough to fundamentally change the market.
“Millions of homeowners remain locked into mortgage rates that are unlikely to be available again anytime soon. Others continue to anchor to pandemic-era prices and prefer to withdraw their listings rather than negotiate,” the report went on to say. “Even retirees, traditionally an important source of supply, are finding that downsizing often provides little financial benefit when replacement homes remain expensive and financing costs are substantially higher.”
At the local level, it’s a different story, Veros said. Housing markets are moving in very different directions.
While much of the country continues to wrestle with affordability and sluggish sales, several markets in the Northeast and Midwest are outperforming the national average. Buyers are increasingly gravitating toward communities where home prices remain within reach, local economies are stable and limited housing supply continues to support home values, according to Veros.
The strongest-performing markets in the Q2 2026 VeroFORECAST include Manchester, N.H.; Rochester, N.Y.; South Bend, Ind.; Rockford, Ill.; Springfield, Mass.; Norwich and Hartford, Conn.; Reading, Pa.; Racine, Wis.; and Lancaster, Pa.
By contrast, several Sun Belt markets that surged during the pandemic boom are now facing the other side of that cycle. Markets such as Cape Coral, Punta Gorda, Ocala, and North Port in Florida; Austin, Corpus Christi, and Sherman in Texas; and Monroe, Lake Charles, and Slidell in Louisiana are forecast to post modest price declines over the next 12 months.
“The Q2 2026 VeroFORECAST suggests that the U.S. housing market has avoided a major downturn, but it has not escaped it,” Veros concluded. “Until affordability improves meaningfully, housing will continue to move forward slowly, unevenly, and with far less momentum than buyers, sellers, or the broader economy would like.”
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