Housing Market Adjustments

This week, I shared insights with Bloomberg Radio and Reuters on what to expect for the housing market in 2026. Below is a quick overview, and you’ll find the full analysis—complete with interactive charts to explore your local market—linked in the comments. 1) Affordability improves—mainly via prices and paychecks. Mortgage rates hover in the low-6% range, helpful but not a game-changer. The bigger lift comes from modest home-price growth paired with steady income gains, nudging affordability higher where active listings are more plentiful. 2) “Life happens” demand pushes sales up, slowly. We’re still missing millions of transactions relative to the pre-pandemic norm, leaving pent-up churn. With ~52 million Americans in their thirties—and millennials projected to add ~10.6 million owner households over time—life events (marriage, kids, caregiving, job moves) keep transactions grinding higher even if rates only edge down. 3) A two-speed map persists. Lean inventory in the Northeast and Midwest keeps conditions tight and price growth steadier. Many Southern and Western metros carry more supply—22 of the 75 largest markets already sit above their 2018–2019 active-listing baseline, concentrated in Florida and Texas—so pricing is more negotiable. 4) Stress pockets, not a foreclosure wave. Measures of strain have risen off the floor, but broad distress typically needs both income loss and no equity. The labor market has cooled—not cracked—and sizable homeowner equity keeps risk contained; weakness is likelier where affordability is stretched, insurance has jumped, or local job growth has softened. 5) Inventory climb as rate-lock loosens at the margins. Inventory has picked up in 2025, even if the pace of growth has slowed recently. Expect a steady rise in 2026—uneven by region, helped by completions and any incremental rate relief. 6) New homes keep the edge. Builders stay cautious on starts and focus on selling standing inventory; incentives like rate buydowns help meet buyers where they are. With many owners still rate-locked, builders retain a relative advantage until competition from resale supply normalizes. Bottom line: 2026 delivers progress without a breakout—modestly better affordability, a gradual rebound in activity, persistent regional divergence, contained risk, rising supply, and a continued new-home edge. Link to Reuters segment: https://lnkd.in/egbjdPJ7

The U.S. housing market is entering a troubling phase. Right now, there are at least half a million more people trying to sell their homes than there are buyers. That gap is pushing the market toward a soft correction: sellers are being forced to adjust expectations, while buyers remain cautious. After years of extreme supply shortages, the pendulum is quietly swinging the other way — and it’s happening faster than many expected. One of the hidden accelerators behind this shift is tariffs. Higher tariffs on construction materials and imported goods are driving up building and renovation costs. That makes new homes more expensive, remodels less attractive, and discourages investors from taking on new projects. At the same time, these costs ripple through everything from appliances to lumber, squeezing affordability even further. The result is a market stuck in tension: too many sellers, not enough qualified buyers, and rising input costs. Unless interest rates or tariff policies change meaningfully, housing is likely to feel this pressure for months to come. We’re not seeing a crash — we’re seeing the early signs of a market trying to rebalance under structural strain.

America’s Housing Markets Are Flipping Over the past three years, U.S. housing markets have undergone a major shift, one that should make every residential investor and developer rethink their strategies. 🔻 Where prices are falling: The South, once the pandemic-era darling, is now seeing the sharpest declines. Austin, TX leads with a -12% drop, while Florida metros like North Port and Cape Coral are down -10% each. A surge in homebuilding and rising insurance premiums are leaving many homes unsold, cooling demand across Texas and Florida. 🔺 Where prices are rising: Meanwhile, the Northeast and Midwest are on fire. Rochester, NY tops the nation with a +31% gain, followed by Hartford, CT (+29%) and Milwaukee, WI (+27%). Limited housing supply and relative affordability near major job centers are fueling fierce competition. 📊 The Big Picture: Southern inventory is 3.6% above pre-pandemic levels, thanks to overbuilding. In contrast, Northeast inventory has plunged 51%, driving double-digit price appreciation. For developers, this signals a clear message: the next wave of opportunity may not be in the booming Sunbelt metros but in overlooked, supply-constrained Northeastern and Midwestern cities. 👉 Question for investors & builders: Are you repositioning your pipeline toward these rising markets, or doubling down on Southern recovery bets?

More sellers are cutting prices than any February since 2012, and they are having to adjust their expectations by tens of thousands of dollars. According to a new report from Redfin (linked in comments), 34.2% of home sellers reduced their asking price in February, up from 31.5% a year ago. The average cut among those sellers was $40,915. There are far more sellers than buyers right now. High mortgage rates are keeping demand suppressed, and economic uncertainty is giving potential homebuyers pause. When supply outpaces demand, prices have to come down to keep the market moving. A few things stand out to me in the data: — Sellers who've owned their homes for less than 2 years are cutting prices at the highest rate (37.4%). They bought near the peak and have less room to wait it out. — Texas markets are under the most pressure. San Antonio (57.9%), Austin (55.2%), and Dallas (47.3%) top the list for price cuts. The places that saw massive run-ups during the pandemic and are now correcting. — The Bay Area is a different story entirely. Only 7.4% of San Francisco sellers cut prices. But that's largely because Bay Area sellers routinely underprice to spark bidding wars. Spring is typically when price cuts slow down as demand picks up seasonally. We'll see if that holds this year, or if rates and uncertainty keep buyers on the sidelines longer than usual. The housing market isn't crashing. But it's clearly in a period of adjustment, and sellers who price competitively from the start are the ones closing deals. #HousingMarket #RealEstate #HomePrices #HousingData

Mortgage rates hit 7.2% last week. Inventory of unsold homes subsequently increased this week for the first time all year. Price reductions ticked up too for the first time since November. Some of the home price signals are softening as potential home buyers are faced with higher-for-longer mortgage rates. These are the details we’re reviewing in this week’s Altos Research real estate market data. [video link follows in the comments] Inventory - There are now 498,000 single family homes on the market in the US.  - That’s almost 1% more than last week, and now 16% more than last year at this time.  - This is the first inventory increase of the year.  - Mortgage rates are up sharply from last year so inventory is too - In the Inventory chart below, the red periods are when rates and inventory were rising. The green sections are when rates and inventory were falling. Pending Home Sales - This week saw 59,000 new contracts started on single family homes, that’s 2% fewer than last week - The sales rate came in a fraction fewer than a year ago, which is what I projected last week but still disappointing - In the New Contracts Pending chart below you can see how sales growth could come in negative YoY in the next few weeks.  - I still expect home sales to show year over year growth again by mid-March, due to the fact that there is more selection available now. Price Reductions - Currently 30.4% of the homes on the market have taken a price cut from the original list price. That’s the first increase of the season in price reductions.  - In a few weeks we should have more price cuts than a year prior. - This is one of the “softening” indicators for future sales prices. Home prices are not declining, but appreciation is very slow. - In the Price Reductions chart below see how the rate is converging with last year’s curve. Since price cuts are a leading indicator for future sales prices, you can see exactly how consumers are reacting to rising mortgage prices. Pending Sales Prices - For the homes that went into contract this week, prices ticked down. The median price of single family homes newly pending is $375,000 - That’s 1% less than last week and 2% above a year ago.  - This is not a down-trend (yet). But something to keep an eye on. - In the Median Price of New Contracts chart below, see how the year-over-year gains are starting to wane. Home Prices - The median price of single family homes in the US is $429,000. That’s up 1% for the week. - The median price of the new listings is up to $410,000.   - The gradual upslope of both of the curves in the Median Home List Prices chart below is another “softening” indicator for home price appreciation for 2024.  - Last year at this time, the price momentum was gaining with surprising demand. Mortgage rates are much higher now and we can see the impact on price appreciation.

New-Home Sales Just Dropped to a Seven-Month Low New-home sales fell 13.7% in May - the steepest decline this year and the weakest pace since October. It’s another clear signal that demand is under stress, and that the housing market’s soft landing may be turning soft underfoot. For much of the past year, homebuilders have done what existing homeowners couldn’t: they kept inventory flowing. With owners locked into ultra-low mortgage rates and staying put, the new-home market became the only viable path to ownership for many buyers. Builders responded with aggressive incentives like mortgage rate buy-downs, free upgrades, closing cost coverage. And it worked . . . for a while because incentives kept the pipeline moving. But now, even with those perks, buyers are stepping back. The underlying affordability gap is simply too wide. Mortgage rates remain stuck around 7%. Insurance costs are rising. Household budgets are under pressure. The tools that once created urgency are losing their grip. When incentives stop working, it’s not just caution. It’s a signal that buyers are fundamentally rethinking what they can afford, or what feels worth the risk right now. That kind of behavioral shift doesn’t just affect homebuilders. It cascades through the entire consumer economy. Behind the scenes, supply is quietly building. Completed homes for sale rose to 119,000 in May which is the highest in nearly 16 years. Groundbreaking activity is slowing. Builders are pulling back. And yet, despite softer demand, the median sales price climbed 3% year-over-year to $426,600. That’s not inflation. That’s segmentation. Price gains aren’t market-wide they’re concentrated in the upper tiers, where buyers are less sensitive to rates and more resilient to volatility. Everyone else is sitting on the sidelines. For the Fed, this report won’t move the needle alone, but it adds to a mounting case that restrictive policy is weighing heavily on interest rate–sensitive sectors. Housing is often the first to turn. If it stays soft into the fall, it could reshape expectations about consumer strength heading into 2026. At Havas Edge, we track this data because when the psychology of the buyer shifts, so must the strategies of the marketer. #HousingMarketUpdate #ConsumerBehavior #MacroSignals

🏡 Are We Witnessing the Early Signs of a New Housing Cycle? Here’s Why I Believe We Are. The Canadian housing market is on the brink of what could be the next significant cycle, driven by recent interest rate cuts, a surge in immigration, and increasing pressure on housing supply. But what evidence do we have to support this? 🔍 What the Data Tells Us: Rate Cuts as a Catalyst: The Bank of Canada’s three consecutive interest rate cuts—bringing the rate down to 4.5%—are more than just a temporary relief for homeowners. Historically, these moves signal the start of new housing demand cycles. Following previous periods of elevated rates, reductions like this spurred market activity. A Wave of Mortgage Renewals: By 2025, about 25% of Canadian mortgages will come up for renewal. This renewal window, combined with lower interest rates, creates an opportunity for a shift in refinancing, spurring new transactions. Immigration Surge & Housing Demand: Canada’s population is set to grow by 1.5 million by 2026, largely driven by immigration. New permanent residents are projected to account for 80% of new housing demand. This demographic surge will significantly pressure the already strained housing market, driving both demand and prices. Supply Challenges: We know Canada is short at least 3.5 million homes by 2030 to meet affordability targets, according to the CMHC. The current undersupply, coupled with rising demand, is likely to reignite construction activity—this is a classic signal that a housing cycle is beginning. A new housing cycle has profound implications for Canada's economy: Increased activity in home purchases and construction can lift GDP. With housing tied to so many other sectors—construction, services, retail—a new housing cycle helps stimulate broader economic activity. The housing market is a major driver of jobs, from construction workers to mortgage professionals. While prices remain a challenge, the long-term impact of a new housing cycle could increase supply, easing affordability pressures in the future. We’ve seen this pattern before. After the 2008 financial crisis, rate cuts and a renewed focus on stimulating housing demand kick-started a new cycle that lasted nearly a decade. Key metrics like home sales, housing starts, and mortgage approvals saw significant jumps as the cycle gained momentum. As rates continue to fall, potential buyers who’ve been waiting on the sidelines will return to the market. The result is a domino effect that drives home price stabilization, stimulates new builds, and rejuvenates the market overall. While it’s impossible to predict market dynamics with absolute certainty, the signs are there: We are likely at the early stages of a new housing cycle. The convergence of lower interest rates, high demand due to immigration, and the urgent need for housing supply makes this moment pivotal for the future of the Canadian real estate market.

Housing market conditions continue to deteriorate. The NAHB Housing Market Index sank to 32 in June, the lowest since 2022. Recall that a level below 50 represents net-pessimism. At 35, the sub-index measuring present sales has not been this weak since 2012. Buyer traffic fell for the fourth time in the last five months while future sales declined for the fifth time in the last six months – both to their lowest since November 2023. The drop in homebuilder sentiment implies weakness ahead for residential investment, specifically new home sales and single-family construction. For builders, selling homes is becoming a costly business. Resale inventories are climbing, weigh on prices, and builders need to provide a great deal of incentives just to move product. That represents a squeeze on profit margins. In this environment, it might make more sense to finish the homes you've sold as opposed to breaking ground on new homes.

As we move into 2026, it’s becoming increasingly clear that the conversation around real estate—particularly multifamily—is shifting. Not because the challenges have disappeared, but because the rate of change is. After several years defined by volatility, tightening financial conditions, and capital hesitation, we’re beginning to see early signals that parts of the rental housing market are stabilizing—and in certain pockets, bottoming. This creates an interesting setup for long-term investors willing to look past recent headlines and focus on where fundamentals, policy, and capital cycles are converging. 1. Stress is stabilizing, not accelerating. In other words, the market appears less like it’s falling and more like it’s finding its footing. Periods like this—where fundamentals are bruised but stabilizing—have historically proven to be fertile entry points for patient capital. Not because the recovery is obvious, but because it is not yet priced in. 2. Rates: The market may be underestimating policy risk—in the other direction. Consensus expectations still assume a relatively modest rate-cutting cycle ahead. This view may be overly conservative. A weakening labor market, slowing growth, and rising political pressure create a backdrop where deeper-than-expected rate cuts are not only possible, but plausible—particularly under a Federal Reserve leadership more closely aligned with pro-Trump priorities. If monetary policy eases more aggressively than current pricing suggests, the implications for real assets are meaningful. Cap rates are far more sensitive to expectations than headlines, and even incremental shifts in rate outlooks can materially change valuation math. Markets often miss inflection points not because the data isn’t there, but because it doesn’t yet feel “safe” to believe. 3. Hard assets in a softer-dollar, easier policy world...Historically, environments characterized by falling real rates, rising fiscal pressure, and currency uncertainty have favored real assets over purely financial ones. Multifamily real estate sits at an interesting intersection: – It produces durable, recurring cash flow – It benefits from replacement cost inflation – And it tends to reprice upward as capital seeks inflation-resistant yield In a world where monetary easing supports asset values but does not necessarily restore confidence overnight, tangible assets with income often become a preferred home for capital. Not as a trade—but as a hedge against policy volatility and purchasing power erosion. The 2026 multifamily backdrop is not about a return to peak pricing. It’s about asymmetry. Stabilizing fundamentals reduce downside risk. Mispriced rate expectations create upside optionality. The macro environment increasingly favors real assets over nominal ones.