If you’ve been waiting for a "crash" to finally buy a house, Zillow CEO Jeremy Wacksman has some sobering news for you. Honestly, it’s not the news anyone wants to hear while staring at a $3,000 monthly mortgage estimate.
Basically, the housing market isn't broken because of a bubble; it's broken because we simply stopped building enough roofs. Wacksman has been pretty vocal lately about what he calls a "decade-long supply shortage." It’s a supply-side nightmare that has left the U.S. short by roughly 4.7 million homes.
The Zillow CEO warns on housing market conditions that are creating a "stagnant" environment. We aren't seeing a 2008-style collapse. Instead, we’re seeing a "frozen" market where nobody wants to move, and nobody can afford to start.
The Supply Problem Is Real (And It's Getting Worse)
Wacksman points out that the real villain isn't just high interest rates. It's the fact that since the Great Recession, construction never really recovered to the levels we need.
Even though 2024 saw a decent bump in new starts, 2026 is actually projected to be the slowest year for single-family home construction since 2019. Why? Because builders are getting spooked by high labor costs and the sheer difficulty of making "affordable" projects profitable.
If you're a buyer, this means the inventory "thaw" you’ve been praying for might just be a light mist.
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Why Your Neighbors Aren't Selling
You've probably heard of the "golden handcuffs." It's that feeling of being trapped in a 3% mortgage while the current market is hovering near 6%.
Wacksman notes that this effectively freezes the market. If a homeowner sells their current place, they have to trade a low rate for a high one, often paying more for a smaller house. It doesn't make sense. So, they stay put.
- Result: Feverishly low inventory.
- Result: Competition stays high even with fewer buyers.
- Result: Prices don't "crash"—they just wobble or stay flat.
Zillow CEO Warns on Housing Market: The 2026 "Small Wins" Reality
Zillow’s latest data for 2026 suggests home values will rise a modest 1.2% to 1.9% nationally. That's a "small-wins year," according to Zillow Senior Economist Kara Ng.
It's not a boom. It's not a bust. It's just... there.
One weird twist: while most of the country is cooling, some spots are still on fire. Zillow expects Hartford, Connecticut to be one of the hottest markets this year. It's the only major metro where they actually expect affordability to get worse because demand is so localized and supply is so tight.
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The Mortgage Rate Psychological Barrier
Everyone is watching that 6% mark like a hawk.
Early in 2026, the government announced plans to purchase $200 billion in mortgage-backed securities (MBS). This actually pushed rates briefly below 6% for the first time in ages. Wacksman and his team are optimistic that this could help, but they aren't expecting rates to plummet back to the 3s or 4s.
"Predicting mortgage rates is about as easy as predicting the weather a year from now," Wacksman has joked. But the consensus at Zillow is that we should get used to 6% being the "new normal."
What This Means for You (The "Lifestyle Renter")
A really interesting trend Wacksman highlighted is the rise of the "lifestyle renter."
Nearly 3 in 5 renters now say they plan to keep renting through 2026. Even if rates dropped tomorrow, only about 37% say they would actually jump into the market. People are choosing flexibility over the "American Dream" of homeownership because the entry fee—a typical 20% down payment is now over $73,000—is just too steep.
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If you are renting, there's a bit of a silver lining. Multifamily rents (apartments) are expected to stay basically flat, rising only 0.3%. Single-family home rents, however, are still climbing at about 2.3% because that's where the competition is.
Actionable Insights for 2026
If you're trying to navigate this "frozen" market, here is what the experts are actually doing:
- Shop the Incentives, Not Just the Price: Since new construction is slowing down, builders are desperate to move their existing inventory. Look for "rate buydowns" where the builder pays to lower your mortgage rate for the first few years.
- Look for "Grocery-Optimized" Features: Zillow is seeing a massive surge in listings mentioning walk-in pantries and "garage cold zones." In a high-inflation world, people want to store more food and shop smarter. These features are actually adding value to homes right now.
- Watch the Southeast and West: These regions are the most sensitive to rate changes. If rates dip even a little, these are the markets that will see the most "pent-up demand" release, meaning competition will spike instantly.
- Don't Wait for the 3% Rate: It's likely not coming back. If you find a house that fits your budget at 5.8% or 6%, and you can afford the payment, that might be as good as it gets for the next few years.
The Zillow CEO warns on housing market conditions that require patience. This isn't a year for "flipping" or quick wins. It's a year for stability and very, very careful math.
If you're serious about buying this year, your first step should be using a "BuyAbility" tool to see what your actual monthly payment looks like at a 6.1% rate versus a 5.8% rate. Don't look at the total price; look at the monthly check you'll be writing. That's the only number that matters in 2026.