Why U.S. home prices are diverging in 2026 (and what to watch next)

The national picture: appreciation is cooling

National home price growth is decelerating quickly compared with the pandemic-era surge. Redfin’s March 2026 Home Price Index showed prices up 1.7% year over year (the slowest pace in its series back to 2012) and up 0.1% month over month on a seasonally adjusted basis. [redfin.com]

Zillow’s March 2026 market report also points to a cooler market: the Zillow Home Value Index (ZHVI) was up 0.8% year over year in March, with a typical U.S. home value of $365,545. [zillow.com]

Inventory and price cuts: the fastest signals

The market’s “temperature” is increasingly determined by supply—and supply is rebuilding unevenly. Zillow reported 1.23 million homes for sale nationwide in March and noted active inventory was 4.2% higher than a year earlier, marking the 28th consecutive month of year-over-year inventory growth. [zillow.com]

One of the clearest near-term indicators of seller competition is the share of listings with a price cut. Zillow reported 22.6% of listings had a price cut in March, which can signal sellers adjusting to a smaller pool of payment-qualified buyers. [zillow.com]

Forecast downgrades: interpreting a flatter path

Against that backdrop, Zillow’s broad forecast revisions have drawn attention. Fast Company summarized Zillow’s updated outlook as projecting a 0.0% change in national home prices between March 2026 and March 2027. [fastcompany.com]

Zillow’s own April 2026 forecast commentary also framed the outlook as mostly flat, with inventory growth outpacing sales. [zillow.com]

A key nuance: “flat nationally” can still mean meaningful local differences. The metro-level forecast list highlighted by Fast Company includes markets expected to gain several percentage points and others expected to decline by several percentage points over the same window. [fastcompany.com]

Rates and affordability: why the split persists

With price growth cooling, affordability and monthly payment sensitivity become the deciding factors. Freddie Mac’s Primary Mortgage Market Survey shows the average 30-year fixed mortgage rate at 6.23% as of April 23, 2026. [freddiemac.com]

What to watch next (60–90 days)

• **Active listings and new listings**: Is supply rising in your metro, or staying constrained?
• **Price-cut share**: Are sellers conceding faster, or holding firm?
• **Pending sales vs. last year**: Are buyers re-engaging at today’s payments?

If inventory continues to rise while rates stay near current levels, more metros are likely to drift toward flat-to-soft pricing rather than broad-based appreciation.