When asked about home price expectations, roughly eight in ten respondents express confidence in continued appreciation over the coming year. This optimism appears in multiple 2026 surveys, from seller confidence to household expectations tracked by the Federal Reserve. However, the actual market backdrop reveals a more complicated story: year-over-year home price growth currently sits at just 0.4%, a far cry from the double-digit gains seen during the pandemic boom.
The disconnect between what buyers and sellers expect and what the data currently shows offers insight into both market psychology and the genuine forces reshaping residential real estate in 2026. Households surveyed by the Federal Reserve Bank of New York expect a median home price appreciation of 4.0% over the next twelve months, a figure that reflects cautious optimism despite recent cooling in the market. Meanwhile, 83% of potential sellers believe they will receive their asking price or more, with 37% expecting to exceed it—a statistic that captures the enduring confidence among those with the most direct stake in price movements. These figures matter because survey expectations, even when optimistic, influence actual behavior: sellers who expect gains may list higher; buyers who anticipate appreciation may accelerate purchases; and investors may adjust strategy accordingly.
Table of Contents
- Why Do So Many Expect Home Prices to Keep Rising?
- The Growing Disconnect Between Expectations and Current Market Data
- How Different Forecasters View the Road Ahead
- Understanding Seller Confidence in a Shifting Market
- What Could Derail Price Appreciation Forecasts
- The Role of Supply and Demand in Future Prices
- What These Surveys Really Tell Us About Market Behavior
Why Do So Many Expect Home Prices to Keep Rising?
The expectation of continued price appreciation rests on several foundations, though not all are equally solid. Historically, home prices have appreciated in most markets over long time horizons, creating a baseline assumption that this pattern will persist. Additionally, limited housing supply in many desirable areas continues to provide structural support for prices, as demand outpaces the number of available homes. The Federal Reserve’s gradual interest rate adjustments also factor into sentiment: as rate speculation moderates, some market participants see room for buyer demand to strengthen, which could support prices.
But there’s an important caveat. The forecasts vary considerably depending on the source. The National Association of Realtors projects a 4% median home price increase for 2026, while Fannie Mae forecasts only 2.1% to 2.8% annual growth, and Realtor.com estimates 2.2%. These differences, while appearing modest on the surface, represent billions of dollars across the country and can mean the difference between a wealth-building investment and break-even performance. A household that purchases based on the NAR’s 4% forecast but experiences the Fannie Mae range could find their return materially lower than anticipated, particularly after accounting for transaction costs, maintenance, and opportunity cost.
The Growing Disconnect Between Expectations and Current Market Data
One of the most striking aspects of surveyed price expectations is how they diverge from current measurable trends. As of June 2026, listing prices have declined 2.4% year-over-year and have now fallen for seven consecutive months. This means that the actual asking prices being posted in the market are lower than they were a year prior, yet surveys indicate that most sellers and buyers still expect appreciation ahead. This gap suggests either that respondents believe a turnaround is imminent or that current declines are temporary phenomena that will not persist into the forward-looking period covered by the surveys.
The three-month price growth of 0.8% offers a small counterpoint, suggesting that momentum may have shifted away from decline at least in the most recent quarter. However, the broader pattern of declining listing prices presents a warning for those who interpret survey optimism too literally. Market participants may expect appreciation, but expectations and outcomes are not the same thing. Recessions, policy changes, credit tightening, or shifts in migration patterns could easily invalidate these forecasts, and surveys measure sentiment, not prediction capability. Buyers and sellers, no matter how confident, cannot simply will prices upward if underlying economic conditions move in the opposite direction.
How Different Forecasters View the Road Ahead
The variation in price forecasts across major institutions underscores the genuine uncertainty baked into 2026 housing outlook. The National Association of Realtors’ 4% projection sits at the optimistic end of the range, while Fannie Mae’s more conservative 2.1% to 2.8% reflects greater skepticism about appreciation. Realtor.com falls in between at 2.2%, and these firms employ different methodologies, data sets, and economic assumptions. A buyer in a market where local prices align with historical NAR trends might experience appreciation close to 4%, while a buyer in a softening market might find themselves much closer to Fannie Mae’s lower forecast—or even underwater if regional factors dominate.
What complicates any forecast is the highly localized nature of housing markets. A neighborhood experiencing rapid population inflow and severe supply constraints may see appreciation well above 4%, while a region losing residents or facing a glut of new construction could see prices stagnate or decline. The national survey data and forecasts provide useful context but should not be treated as guarantees for any specific property or location. Someone buying a home as a primary residence primarily cares about their local market, not the national median, and survey expectations at the national level may or may not reflect conditions in their particular area.
Understanding Seller Confidence in a Shifting Market
The Realtor.com finding that 83% of potential sellers expect to receive their asking price or more is particularly revealing about market sentiment, especially the 37% who expect to exceed it. These figures suggest that sellers, on average, remain confident in their negotiating position and believe inventory pressures will support their pricing power. This confidence may stem from experience during the 2022-2024 period when supply-constrained markets did indeed favor sellers, and some market participants may still be operating from that recent playbook. However, this confidence faces a real test in practice.
A seller’s expectation of receiving asking price or above is only validated when a buyer actually steps forward and makes that offer. In a market where listing prices have declined for seven consecutive months, a significant portion of sellers’ expectations may go unmet, creating potential frustration and lengthened time on market. Some sellers may respond by adjusting expectations and lowering prices, while others may temporarily remove properties from the market, expecting better conditions later. The behavioral response to unmet expectations can influence actual market activity, potentially creating a self-reinforcing cycle where prolonged price softness eventually reflects the realized tightening between optimistic expectations and actual buyer demand.
What Could Derail Price Appreciation Forecasts
Several risks lurk beneath the surface of optimistic price expectations. Economic recession, a renewed credit crunch, or a significant shock to employment could quickly reverse sentiment and pressure prices downward. Additionally, surveys measure current expectations, which are backward-looking to some degree; they reflect recent experience and current conditions, not ability to predict sudden policy shifts or economic shocks. If mortgage rates spike, or if property taxes and insurance premiums accelerate faster than incomes, affordability will worsen, and demand may soften beyond what forecasters anticipated.
Another limitation specific to survey data is that it captures expectations but not commitment. A respondent may express confidence in price appreciation when answering a Federal Reserve survey, but those same individuals may not actually purchase, sell, or invest based on that expectation. Survey responses and actual market behavior diverge, sometimes significantly. Additionally, the respondents most likely to participate in housing surveys are those with existing property or active interest in the market; they are not a random cross-section of the population. This selection bias means survey-based expectations may overweight the views of participants with skin in the game, who may have motivation to express optimism.
The Role of Supply and Demand in Future Prices
The structural imbalance between supply and demand in many markets provides a foundation for the expectation of continued appreciation. The U.S. has a well-documented housing shortage, with millions of homes needed to meet demographic demand and replace aging stock. This deficit should theoretically support prices, as long as demand remains healthy and supply remains constrained.
In markets where both conditions hold—limited new construction and continued population inflow—the probability of sustained appreciation increases. Conversely, in regions where new housing is being built rapidly or where population is stagnating, appreciation may prove harder to achieve regardless of national surveys. An example of this dynamic appears in Sun Belt markets, where population migration has been strong, yet increased construction has also expanded supply. Some of these markets have experienced solid price appreciation despite broader cooling nationally, while others have seen listing prices decline as new inventory overwhelmed demand. Buyers and sellers interpreting national surveys as applying to their local market may be making a critical error if supply-demand fundamentals differ in their region.
What These Surveys Really Tell Us About Market Behavior
Housing market surveys, including those tracking expectations for price appreciation, serve a practical purpose: they reflect the mood and sentiment of participants, which in turn influences their economic decisions. When eight in ten people expect prices to rise, some portion will act on that expectation—either by accelerating a home purchase or by listing their property with confidence. These behavioral responses matter and shape the actual market outcome, even if the underlying forecasts turn out to be wrong. However, interpreting a survey result as a prediction of what will actually happen is a category error.
A survey tells you what people expect; it does not tell you whether they are correct. The 4.0% median expectation from the SCE Housing Survey may prove accurate, or it may prove optimistic given the 0.4% year-over-year growth already in evidence. Participants reading such surveys should understand both the useful information (that market participants remain generally optimistic) and the limitation (that optimism is not accuracy). The gap between 4% expectations and 0.4% current reality is large enough that the near-term trajectory of prices remains uncertain, regardless of what surveys indicate participants believe.
