Looking at Zillow Research's latest forecast, I'm seeing a pretty clear split developing in the housing market as we move through 2026. The rental side is gaining real momentum, with their projections showing rents climbing across the board. They're forecasting single-family rents will grow by about 2.1 percent this year, putting the typical monthly rent at around $2,300, while multifamily units are expected to see growth of 1.8 percent. What's particularly interesting is that several major metros, including San Francisco, are showing real acceleration in rental activity, while other hot markets like Austin and Denver are still dealing with declining rents but starting to trend in a healthier direction.
The for-sale picture tells a different story altogether. Zillow's economists are projecting that home values will rise just 0.3 percent for the full year, which is practically flat. The reality is that higher mortgage rates came back into play and haven't done anything to help buyer demand recover. Inventory continues to pile up faster than homes are selling, which means buyers actually have more negotiating power than they've had in years, but it's also keeping a lid on any meaningful price appreciation.
When it comes to sales volume, the data shows existing home sales are expected to hit about 3.78 million units for the year, which represents growth of 1.5 percent year over year. But here's the catch, and this is important: that overall number masks a pretty uneven year. The first half is coming in stronger, but the second half, particularly the fourth quarter, is expected to see sales actually decline compared to last year. We're talking about a projected drop of 3.2 percent in the final quarter. Despite this modest growth number, sales are still well below where they were before the pandemic.
The real driver behind this rental strength, according to Zillow's analysis, is the continued weakness in the for-sale market. People who would normally be buying homes right now are simply staying in rental situations longer because they can't afford to make the jump into homeownership. The affordability crunch is real, and it's keeping people on the sidelines and in rental units.
What I'm seeing here locally in the Bay Area and East Bay aligns with what Zillow is describing nationally. We're definitely noticing rental demand holding steady while the for-sale market is taking a breather. The inventory we're seeing is giving buyers more leverage to negotiate, which is a shift from what we've experienced over the past several years. For sellers, this means the easy appreciation days are behind us, and pricing is becoming more critical. For buyers, if you're thinking about making a move, you've got more cards at the table than you've had in a while.
