The New York real estate market has faced challenges for both buyers and sellers in the past year due to the intertwined influences of high property prices and interest rates. According to the latest economic forecast from the real estate platform Zillow, the housing market in the United States is expected to gradually return to a more stable and balanced state in 2026. However, for New York, structural supply-demand imbalance will continue to dominate market trends, making it difficult to change the pattern of heavy burdens for homebuyers and rising rents in the short term.
Zillow indicates that the overall U.S. housing prices are expected to only moderately increase by about 1.2% in 2026, showing a noticeable cooling in price trends. However, New York City, constrained by scarce land, high construction and financing costs, and stable demand in core areas, has limited downward pressure on housing prices. Economists believe that even if New York housing prices no longer see significant increases, a significant decline is unlikely to occur, and first-time homebuyers will still face high thresholds.
In terms of interest rates, Zillow predicts that mortgage rates are likely to remain above 6% in 2026. While there has been some easing compared to previous years’ highs, high interest rates will still dampen the willingness to purchase homes in the already high-priced New York market, causing some potential buyers to postpone their entrance into the market or continue renting, further boosting rental demand.
As for the rental market, Zillow estimates that apartment rents in the United States will only see a slight growth of about 0.3% in 2026, but New York is considered a significant exception. According to the StreetEasy Rent Index, rental prices in New York City had already risen by 4.8% in the first ten months of 2025. With limited affordable housing options and inadequate new rental supply, the market expects rents in 2026 to continue to rise at a faster pace. On the other hand, as potential buyers extend their rental periods, the demand for single-family rentals continues to increase, also providing support for rental prices.
The supply side is similarly pessimistic. Zillow points out that under the influences of high construction costs and a slowing labor market, the momentum of new home construction in 2026 may slow down. For New York, it is difficult to rapidly fill the housing gap with new additions, indicating that price and rental pressures will continue. However, there is a trend of structural change in the market, with the proportion of renting families with minors increasing, leading more rental properties to emphasize family-friendly and shared spaces as new selling points to attract tenants.
Furthermore, technology is gradually changing the operation of the real estate market. Zillow expects that artificial intelligence will play a more prominent role in the real estate transaction process, improving efficiency and reducing transaction friction. For the complex and costly New York market, the widespread adoption of AI tools is expected to enhance transparency and decision quality.
The report analysis suggests that in 2026, the New York housing market is unlikely to experience drastic reversals but will gradually slow down within the framework of high prices and demand. Buyers will still have to endure the dual tests of prices and interest rates, while renters will face continued pressure from rising rents.