You know, according to Zillow Research, we're seeing a really interesting split in the market right now heading into the latter part of 2026. The rental side is actually heating up quite a bit, with their forecast showing rent growth accelerating significantly from what they were predicting just a month earlier. They're expecting single-family rents to climb about 2.1% this year, landing around twenty-three hundred a month on average, while multifamily rentals should see a slightly more modest increase. Even some of the major markets that have been struggling with declining rents, like Austin, Denver, and Dallas, are starting to show signs of turning the corner toward positive year-over-year growth.
What's interesting is that San Francisco is actually leading this rental momentum, showing some real acceleration. This rental strength is being fueled in part by what's happening on the sales side. Mortgage rates have climbed back to elevated levels, and affordability is still pinching pretty hard, so a lot of would-be buyers are staying in rental situations longer than they might want to.
On the for-sale side, things have cooled down from where we thought we were headed early in the year. We started 2026 with some cautious optimism, thinking we'd see modest sales growth, gradual inventory improvements, and home values just holding steady. But that picture has shifted. The elevated mortgage rates aren't helping demand, and inventory is building faster than sales are moving, which keeps a real lid on price appreciation. Zillow is projecting home values to rise just a fraction of a percent for the full year.
For actual sales volume, they're forecasting about 3.78 million existing home sales in 2026, up slightly from the year before. But here's where it gets interesting: that annual gain is really front-loaded. The first half of the year was stronger, but they're expecting sales to actually decline in the fourth quarter, with that decline running around 3.2%. Overall, we're still below what we saw before the pandemic, which tells you something about how the market has shifted.
What I am seeing locally here in the Bay Area and out in Fremont and the East Bay is that this rental strength is real and worth paying attention to. For sellers, the environment remains challenging with that inventory pressure keeping negotiations in the buyer's favor. For buyers, there's actually more leverage out there than we've had in years, but the affordability piece is still the real headwind. If you're thinking about making a move, this might be a moment where the math works in your favor if you're willing to be strategic about it.
