Zillow’s widely shared 2025 forecast called for U.S. home values to fall about 1.9% by the end of that year. That headline got attention because buyers have been waiting for relief after years of high prices, high mortgage rates, and tight inventory.
But the more useful answer for homeowners in 2026 is this: Zillow’s latest forecast is not calling for a crash. Its June 2026 outlook is roughly flat, projecting about 0.1% national home value growth by December 2026, with existing-home sales still weak. Earlier in 2026, Zillow expected stronger growth, then revised that outlook down through the year.
For a buyer, seller, or homeowner planning a remodel, the practical takeaway is not “wait for prices to collapse.” It is “use a softer market to negotiate, but price the house after repairs, permits, insurance requirements, and construction costs.” On our job sites, the house that looks like a bargain on the listing page is often not the best deal once roof age, drainage, electrical capacity, foundation movement, HVAC condition, and permit history are added back into the math.
What Zillow Actually Predicted, and What Changed
The original “nearly 2% drop” number came from Zillow’s April 2025 forecast. At that time, Zillow expected home values to fall 1.9% in 2025 and expected home sales to rise about 3.3%. That was a meaningful shift after several years when national home prices seemed to move in only one direction.
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By June 2026, the picture was different. Zillow’s latest forecast called for roughly flat national values, about 0.1% annual ZHVI growth by December 2026. Zillow’s sales outlook also remained soft, with its nowcast around 3.76 million existing-home sales and a National Association of Realtors existing-sales forecast around 4.04 million, down about 0.4% year over year.
That matters because a national forecast is not a job-site estimate. A 0.1% national number can hide very different local conditions. Some markets have more inventory and price cuts. Others still have too few move-in-ready homes. In Zillow’s June 2026 state data, Texas is a useful example of regional softness: the average Texas home value was about $302,999, down 1.9% year over year. In parts of the Sun Belt, more listings can give buyers negotiating room. But negotiating room is not the same as a finished, code-compliant, insurable house.
The Construction Reality Behind a “Cheaper” House
When we walk a property with a buyer, we do not start with paint colors. We start with risk. A $15,000 price reduction can disappear quickly if the roof is at the end of its life, the main electrical panel is undersized, the crawlspace has moisture, or the kitchen remodel requires moving plumbing and opening structural walls.
The current construction market keeps that reality sharp. Census and HUD data for June 2026 showed building permits running at a seasonally adjusted annual rate of 1.367 million, down 3.0% from May and 2.3% from June 2025. Single-family permits were 871,000, down 2.4% from May. Starts were stronger overall at 1.427 million, up 19.0% from May, but single-family starts were 895,000, essentially flat month over month. In plain English, supply is improving unevenly, and construction capacity is not opening up everywhere at once.
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Regulatory costs are also a real budget item. NAHB reported that regulatory costs on a typical new home rose from $93,870 in 2021 to $131,734 in 2026. Construction-phase regulation rose from 13.3% to 17.0% of the final price, driven partly by permit fees and building-code changes. That is why we tell clients to treat permitting, engineering, code compliance, utility upgrades, and inspections as part of the project cost, not paperwork after the fact.
Repair-Adjusted Affordability: The Number Buyers Should Use
The listing price is only the first number. A smarter number is repair-adjusted affordability: purchase price plus required repairs, near-term replacements, code work, design scope, permit costs, financing costs, and contingency.
For example, a house listed $25,000 below comparable sales may still be overpriced if it needs $70,000 in immediate work. On the other hand, a plain-looking house with a dry foundation, sound roof, practical layout, modern panel, and dated finishes may be a better long-term buy than a staged house with fresh flooring over unresolved moisture problems.
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| Project or Cost Category | 2026 Planning Range | What Usually Drives the Spread |
|---|---|---|
| Light cosmetic renovation | $15-$40 per square foot | Paint, flooring, basic fixtures, minor trim, limited trade work |
| Midrange full renovation | $75-$150 per square foot | Kitchens, baths, flooring, electrical updates, plumbing fixtures, layout cleanup |
| Gut renovation | $150-$300+ per square foot | Framing repairs, mechanical systems, structural changes, insulation, code upgrades |
| Kitchen remodel | $15,000-$45,000 typical; $75,000-$150,000+ for high-end or layout changes | Cabinetry, counters, electrical, plumbing relocation, ventilation, appliances |
| Bathroom remodel | $8,000-$45,000 typical; around $16,500 often cited nationally | Tile labor, waterproofing, plumbing moves, custom glass, accessibility upgrades |
| Whole-home remodel | $100,000-$350,000+; luxury or structural work can exceed $500,000 | Scope, age of home, system replacement, finish level, occupancy phasing |
| New custom home | $150-$400+ per square foot; high-end custom often $300-$500+ | Region, site work, finish level, utilities, engineering, labor availability |
| Contingency | 10%-20% of remodel budget | Older homes, moisture damage, old wiring, hidden framing, phased occupancy |
NAHB’s latest construction benchmark put average construction cost for a new single-family home at $428,215, or about $162 per finished square foot, with an average sales price of $665,298. That is useful context, but it is not a custom quote. A difficult site, premium finishes, coastal or wind requirements, fire-hardening details, flood elevation, or utility extension can push a real project far above any national average.
Pre-Offer Renovation Checklist for Buyers
Before you write an offer on a house that needs work, walk it with a checklist. A home inspection is essential, but buyers planning major improvements should also get a contractor or design-build professional involved before the due diligence clock runs out.
Roof, Water, and Drainage
Ask for the roof age, material, warranty history, and any repair records. A 20-year-old asphalt roof is a different negotiation item than a 7-year-old roof with documented installation. Look for sagging planes, soft decking, patched valleys, missing flashing, stained ceilings, and water marks around chimneys, skylights, and plumbing vents.
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Outside, check whether soil slopes away from the foundation. Gutters should discharge several feet from the house, not beside the footing. Poor drainage can lead to crawlspace moisture, slab movement, mold, rotten rim joists, and foundation repairs that cost far more than landscaping.
Foundation and Structure
Look for stair-step cracks in masonry, doors that will not latch, windows that bind, sloped floors, cracked tile, patched drywall seams, and separation around trim. None of these signs automatically means the house is failing, but they deserve a closer look.
If you plan to remove walls, add a second story, finish a basement, or build an addition, assume engineering may be required. Structural changes can affect beams, footings, lateral bracing, roof loads, stair geometry, egress, and mechanical routing. This is where “open concept” can stop being a design phrase and become a five-figure structural scope.
Electrical, HVAC, and Plumbing
Panel amperage matters. Many older homes have 100-amp service, which may be tight for modern kitchens, heat pumps, EV charging, additions, workshops, or all-electric upgrades. A 200-amp panel is not automatically adequate either; the load calculation matters.
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For HVAC, ask the age of the equipment, service records, duct condition, refrigerant type, and whether additions or finished spaces were properly sized. A finished attic or converted garage often looks livable during a showing but performs poorly in July and January if insulation, duct design, and air sealing were handled casually.
Plumbing material also matters. Galvanized supply lines, old cast iron, polybutylene, failing sewer laterals, and unvented fixture changes can turn a cosmetic bath remodel into a larger plumbing job. If the home is older, a sewer scope is usually money well spent.
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Windows, Insulation, and Moisture
Failed window seals, rotten sills, missing flashing, and water-damaged trim can indicate more than old windows. Attic insulation should be inspected for depth, gaps, compressed areas, bath fans dumping into the attic, and signs of roof leaks. In many homes, air sealing and insulation improvements are better first investments than expensive finishes.
Permits, Codes, and Insurance Can Change the Budget
Ask for permit history and closed inspection records during due diligence. This matters for resale, insurance, appraisal, and future remodeling. Unpermitted work may look fine until you try to sell, file a claim, or open walls for a new project.
Current codes can also be triggered by the scope of work. A kitchen update may require GFCI and AFCI protection, dedicated circuits, ventilation changes, plumbing updates, smoke and carbon monoxide alarms, or energy-code details. A basement conversion may require legal egress, ceiling-height compliance, fire separation, insulation, moisture control, and mechanical ventilation. An addition can trigger site drainage, setbacks, impervious coverage limits, utility upgrades, structural engineering, and current energy-code compliance.
The 2024 International Residential Code is now part of the code-adoption conversation in many jurisdictions, but local adoption varies. Some cities still use older code cycles with amendments. Others have stricter local rules for wind, flood, wildfire, snow load, energy performance, or stormwater. Before buying based on a dream plan, verify zoning, setbacks, easements, HOA restrictions, flood maps, utility capacity, and permit timelines.
Insurance is another issue buyers often underestimate. In wind, hail, fire, and flood-prone areas, insurers may care about roof age, electrical condition, plumbing type, defensible space, foundation condition, prior claims, and whether previous work was permitted. A house can be affordable on paper and difficult to insure at a reasonable premium.
How to Use a Softer Market in Negotiation
When inventory rises and sellers have fewer offers, buyers may gain room to negotiate price, repairs, or seller credits. The best negotiation package is specific. Instead of saying “the house needs work,” attach numbers and priorities.
Separate the work into three buckets: must-do repairs, code or safety work, and design upgrades. Must-do repairs include active leaks, failed HVAC, unsafe decks or rails, drainage defects, sewer failures, and rotten exterior components. Code or safety work includes hazardous wiring, missing egress, improper gas appliance venting, unsafe stairs, missing smoke alarms, and structural concerns. Design upgrades include cabinets, counters, tile, paint, lighting, and flooring.
That separation helps everyone. A seller may resist paying for your preferred kitchen finishes, but they may be more willing to address a leaking roof valley or unsafe electrical condition. Lenders may also limit seller credits and how those credits can be used, so your agent and lender should confirm the rules before you build the offer around concessions.
For buyers, the goal is not to win a discount and inherit a larger problem. The goal is to buy a house whose total cost still makes sense after repairs, permits, financing, and contingency.
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What Sellers Should Fix Before Listing
In a softer market, obvious inspection problems cost sellers leverage. Fresh paint helps, but it will not overcome a wet crawlspace, active leak, unsafe electrical panel, loose guardrail, failed window, or neglected HVAC system.
Before listing, sellers should handle visible defects that make buyers nervous. Repair leaks. Service HVAC equipment. Replace rotten trim. Correct drainage that dumps water against the house. Tighten loose rails. Fix broken steps. Address unsafe outlets, exposed wiring, missing cover plates, and obvious plumbing leaks. Make sure doors operate properly and windows open, close, and lock.
Closed permits and clean records also help. If you completed a prior remodel, gather permit cards, final inspection records, appliance documentation, roof invoices, warranty information, survey documents, and contractor receipts. Buyers trust organized houses because the risk is easier to understand.
Trend-driven cosmetic work is not always the best pre-listing spend. A seller may get more value from a $1,200 HVAC service and repair, a $900 drainage correction, or a $2,500 exterior trim repair than from a rushed backsplash replacement. Fix the items that show up in inspection reports first.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.When to DIY vs. When to Hire a Pro
DIY can make sense when the work is cosmetic, low risk, and does not affect safety, structure, weatherproofing, or major building systems. Painting, simple hardware swaps, basic shelving, landscaping cleanup, minor trim touch-ups, and some flooring projects can be good homeowner work if you have the time and tools.
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Hire a professional when the work touches structure, roofing, exterior waterproofing, electrical panels, new circuits, gas lines, major plumbing, HVAC, wall removal, additions, basement conversions, decks, stairs, windows, showers, or anything requiring permits and inspections. Tile showers are a common example. They look like finish work, but the real performance is waterproofing, slope, drain detailing, substrate choice, and movement control. A pretty shower that leaks into framing is not a bargain.
Also hire help when sequencing matters. Kitchens, baths, additions, and whole-home remodels require coordination among demolition, framing, rough plumbing, rough electrical, HVAC, insulation, drywall, tile, cabinets, counters, painting, trim, fixtures, and inspections. A missed rough-in detail can delay the project by weeks and cost thousands to reopen finished work.
Should You Buy a Fixer-Upper in 2026?
A fixer-upper can be a smart buy in 2026 if the structure is sound, the layout is practical, the location is right, and the renovation budget is realistic. It is a poor buy if the discount is based on ignoring the expensive parts of the house.
The best candidates usually have good bones and dated finishes: a dry foundation, serviceable roof, logical floor plan, adequate ceiling heights, accessible mechanical areas, and room to improve kitchens and baths without moving every wall and pipe. The riskier candidates have active water intrusion, questionable additions, unpermitted finished spaces, major structural movement, obsolete systems, poor drainage, or renovation plans that depend on zoning exceptions.
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Before closing, price the first 12 months of work. Buyers often plan for the dream remodel but forget the immediate list: roof patching, HVAC service, electrical safety, appliance replacement, sewer repair, drainage, locks, smoke detectors, and insurance-required fixes. A realistic first-year reserve can keep the project from becoming stressful before design work even begins.
The Bottom Line for Buyers, Sellers, and Homeowners
Zillow’s forecast moved from a sharper 2025 decline to a much flatter 2026 outlook. That shift tells us the housing market is softer, but not simple. Buyers may have more leverage in some markets, especially where inventory has grown, but construction costs, code requirements, labor availability, insurance rules, and permit timelines still decide whether a house is a good deal.
On our projects, the winning approach is practical: inspect deeply, price repairs honestly, phase the work, and negotiate with real numbers. A softer market can create opportunity. The buyers who benefit most will be the ones who know the difference between a cheap house and a buildable plan.
Frequently Asked Questions
Did Zillow really predict home prices would fall nearly 2%?
Yes. Zillow’s April 2025 forecast expected U.S. home values to fall about 1.9% in 2025. That was an older forecast, though. Zillow’s June 2026 outlook is much flatter, calling for about 0.1% national home value growth by December 2026.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteWhat is Zillow’s latest 2026 home price forecast?
Zillow’s June 2026 forecast calls for roughly flat national home values, about 0.1% growth by December 2026. Existing-home sales remain weak, with Zillow’s nowcast around 3.76 million.
If prices are flat or falling, should I buy a fixer-upper?
Only if the repair-adjusted price works. Add roof, drainage, foundation, electrical, HVAC, plumbing, permits, design work, and a 10%-20% contingency to the purchase price before deciding whether the home is truly a bargain.
How much should I budget for renovations after buying a house in 2026?
Light cosmetic work may run $15-$40 per square foot, midrange renovation often runs $75-$150 per square foot, and gut renovation commonly reaches $150-$300+ per square foot. Whole-home remodels often land between $100,000 and $350,000+, with complex projects exceeding $500,000.
Do remodels require permits?
Many do. Structural changes, additions, electrical work, plumbing changes, HVAC replacement, basement conversions, decks, and major kitchen or bath remodels often require permits. Local rules vary, so verify requirements before work begins.
Why can construction costs stay high when home prices soften?
Home prices and construction costs are driven by different forces. Materials, skilled labor, permit fees, code requirements, insurance standards, utility upgrades, and site conditions can remain expensive even when sellers reduce asking prices.
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