Will 2026 be the year that homes finally become affordable?

On Wednesday, we’ll get pending home sales for December; that’ll tell us how many homes went under contract. Zillow also recently released a report with some potentially good news for prospective buyers: Their researchers say homes will become affordable in more metro areas by the end of 2026.

To be clear, homes aren’t suddenly becoming way more affordable for everyone, said Orphe Divounguy, senior economist on Zillow’s economic research team. “It's going to be a year of small wins.”

He said there are three factors: “Incomes have continued to increase; mortgage rates have actually fallen relative to a year ago; and then the third factor is, of course, prices — price growth has remained somewhat flat.”

Median-income households buying today have to spend roughly a third of their income on mortgage payments, Divounguy said.

“Which is high, but it's actually the best it's been since August 2022,” he said.

And Zillow forecasts that homebuying in some areas could become even closer to affordable by the end of the year.

Spending no more than 30% of income on home payments — including property taxes and insurance — is the affordability rule of thumb, per Eric Maribojoc, a professor of the practice of finance at the University of North Carolina at Chapel Hill.

“If you start spending more than 30% of your income on housing costs, then it means you're giving up something else,” he said.

For Jessica Lautz, deputy chief economist at the National Association of Realtors, affordability this year, “I think it's a very mixed picture,” she said, chuckling.

She’ll be watching those all-important mortgage interest rates and to see if more inventory comes onto the market and brings prices down.