Arctic vegetation changes, such as increasing shrub-cover, are expected to accelerate climate warming through increased absorption of incoming radiation and corresponding decrease in summer shortwave albedo. Here we analyze mid-summer shortwave land-surface albedo and its change across the pan-Arctic region based on MODIS satellite observations over the past two decades (2000-2021). In contrast to expectations, we show that terrestrial mid-summer shortwave albedo has not significantly changed in 82% of the pan-Arctic region, while 14% show an increase and 4% a decrease. By analyzing the visible and near-/shortwave-infrared range separately, we demonstrate that the slight increase arises from an albedo increase in the near-/shortwave- infrared range domain while being partly compensated by a decrease in visible albedo. A similar response was found across different tundra vegetation types. We argue that this increase in reflectance is typical with increasing biomass as a result of increased multiple reflection in the canopy. However, CMIP6 global climate model albedo predictions showed the opposite sign and different spatial patterns of snow-free summer albedo change compared to satellite-derived results. We suggest that a more sophisticated vegetation parametrization can reduce this discrepancy, and provide albedo estimates per vegetation type.