Housing Market Loses Steam, “Nationwide Purchaser’s Market” Possible in 2026

Dave:
We’re solely midway by means of October and it has already been a wild one for the housing market. We’ve obtained a authorities shutdown, we’ve obtained indicators of recession, we’ve obtained extra sellers leaping into the market, however are consumers biting? We’ll cowl this and extra on as we speak’s episode of On the Market. Hey everybody, welcome to On the Market. I’m
Dave Meyer. I’m simply getting my voice again after 4 superb days in Vegas at BP Con 2025. Hope a few of you have been there as a result of they’re all nice. Each BP Con has been enjoyable, however this one was particular. There was simply a tremendous vitality this yr. I believe when you have been there you’d know that and I used to be there in fact, however so have been the remainder of our panelists. Henry did an superior workshop on deal discovering, however he additionally misplaced to me in golf simply barely, which was very enjoyable.
Kathy participated in a pitch slam for offers and in addition single handedly began a 1500 individual dance get together on the closing get together. Jane did an incredible session on flipping techniques and doubtless closed 5 offers whereas on stage and I gave a keynote in regards to the realities of investing in 2025 and obtained completely wrecked enjoying craps. It was all glorious. I had the time of my life and I can’t anticipate subsequent yr, which occurs to be in Orlando. We introduced it the final day of the convention, so when you didn’t make it this yr, undoubtedly take a look at subsequent yr’s convention. I promise you’ll have enjoyable. By the way in which, earlier than we get into as we speak’s episode, I wished to say that we’re enthusiastic about doing extra kind of small and native occasions for BiggerPockets within the coming yr, so I might like to know within the feedback if that’s one thing that you simply’re focused on and what format you’d need.
See. Would you like meetups? Would you like shows, networking workshops? What would you worth most if in the marketplace got here and visited a city or metropolis close to you? Tell us so we are able to plan extra group occasions and get togethers in 2026. Alright, now let’s speak about all of these things that has been occurring since BP Con began. There’s lots occurring in fact, however as we speak we’re going to give attention to a pair issues. We’ll take a look at new housing market information in fact, and the way actually the market is reacting to the marginally decrease mortgage charges that we’re seeing. We will even speak about how the federal government shutdown is definitely impacting the housing market perhaps greater than folks notice, and we’ll additionally speak about how there are indicators that the economic system normally is softening. Let’s leap in. First up, let’s speak about housing costs as a result of we simply obtained the case Schiller Nationwide Index for July and what it confirmed is that house costs nationally are up 1.7% yr over yr, so that they’re nonetheless up, however they’re exhibiting steady indicators of softening as a result of simply in June, the month earlier than we had them at 1.9%, and that is principally only a continuation of the development that we’ve seen.
We’ve really seen month over month house costs fall 5 consecutive months and simply as a reminder, again in January, the yr over yr quantity, which is now 1.7% was at 4.2% and February is 3.9%, March 3.4, April 2.7, so it’s principally simply been trending downwards nearer and nearer to flat all year long. Now, I personally have been saying this for some time now, however simply as a reminder, I’ve been saying that I do suppose that we’re in a correction as a result of the essential factor to recollect in regards to the case Schiller index, which is the info we’re speaking about as we speak and there’s tons of various value information, they’re all sort of exhibiting the identical factor, however the factor that’s distinctive in regards to the Case Schiller index is that it lags a few months. We’re in October, we’re speaking about July information, and so when you extrapolate out this development the place we have been beginning the yr at 4.2%, now we’re at 1.7%, we’re most likely going to be very near flat by the tip of the yr, and that’s not simply inferring from the prevailing information that we have already got.
Like I stated, there are different information sources that you may take a look at which can be a bit of bit extra present and people additionally present simply persevering with indicators of the housing market cooling. A brand new report final week got here out from Redfin and confirmed that new listings of US properties rose 2.3% yr over yr, so that is simply individuals who select to place their property in the marketplace. That’s up yr over yr and it’s not up loopy 2.3%, nevertheless it’s the most important improve we’ve seen in over three months. Truly over the summer time we noticed fewer and fewer folks selecting to checklist their house in the marketplace. I believe that’s most likely as a result of charges have been nonetheless excessive and we’re coming into this correction and sellers have been simply considering, you realize what? I’m not going to promote into this antagonistic market. I’m simply going to attend it out. However now that we’re in the course of October, I’m recording this on October tenth and simply a few weeks in the past, the fed reduce charges charges are about 6.35% as of as we speak, however they did dip a bit of bit nearer to six.1, 6.2, and so I believe what occurred is plenty of sellers listed their house in September hoping that these decrease charges would usher in further consumers that weren’t actually materializing over the summer time, however sadly that’s not what’s occurring.
In reality, pending gross sales, the variety of contracts principally which were formulated during the last couple of weeks really fell to 1.3% from a yr in the past, so not loopy, however once more, it’s the most important decline in 5 months. We additionally noticed that days on market, the typical time it takes for a property that will get listed to promote is as much as 48 days, which is per week longer than it was final yr. It’s additionally longest it’s been since principally earlier than the pandemic since September of 2019. And so whenever you take a look at all these items collectively, when you take a look at the case Schiller information that I began off with and you progress onto this Redfin information, what you see is a market that’s trending nationally in the direction of principally a flat impartial market and it may flip into extra of a purchaser’s market the place costs are taking place on a nationwide degree.
I really suppose at this level that’s most likely fairly probably. I haven’t but made my predictions for 2026, however when you keep in mind my predictions for 2025 is that we’d be fairly near flat and it’s trying like that one’s going to be spot on. I do know that may be scary for folks within the business like brokers, lenders or buyers, however I simply wish to remind everybody that that is okay. That is regular. That is a part of a traditional housing cycle and really there are some advantages to this. If you’re a purchaser proper now, it implies that there’s extra stock so that you can select from and you will have extra negotiating energy whenever you’re speaking to sellers as a result of they’re going to be competing for a restricted pool of consumers. The second factor is that issues are going to be on sale. You would possibly have the ability to really get properties for cheaper than you have got during the last couple of years.
And the third factor that’s I believe extraordinarily essential for the housing market is that affordability is definitely getting higher within the housing market. I do know it’s not lots higher, however when you see that costs are comparatively flat, they’ve been, wages are going up, they’ve been, and mortgage charges have come down even just a bit bit, that implies that we’re seeing minor enhancements to affordability and we’ve a protracted technique to go, don’t get me flawed, however we obtained to cease someplace. We obtained to see the tide flip and it has a bit of bit, and I do know that’s not nice for on paper when everybody’s seeing the fairness worth of their properties, however if you wish to get again to a housing market that’s wholesome, which I actually do, I believe that is really one thing that’s comparatively constructive. Personally, I’m okay with comparatively flat costs if it implies that we get extra affordability again into the housing market long run as a result of that’s going to get us again to extra predictable investing situations and residential shopping for situations, which is actually what I believe all of us want. In order that’s the replace on the housing market that we’ve had during the last couple of weeks. We obtained to take a fast break, however once we come again, I’m going to speak about how the federal government shutdown is definitely impacting the housing market in methods you won’t notice. We’ll be proper again.
Welcome again to On the Market, Dave Meyer right here speaking about current updates available in the market simply gave you my housing market information. Now transferring on to authorities shut down. I do know that these items occur and typically you’re unaffected by it and I believe most likely for the typical American who’s not seeking to make a significant buy or doesn’t work within the business or is in fact not a authorities worker who’s straight impacted by the shutdowns and furloughs, you would possibly not likely really feel the influence of the shutdown, however there may be some information that reveals that the housing market is being impacted. First, I’ll simply share with you a survey that Redfin simply did with Ipsos, and it reveals that 17% of Individuals are saying that they’re delaying a significant buy like buying a house or a automobile. 7% are saying they’re straight up canceling plans to make a significant buy, after which really 16% stated that they could make a significant buy prior to anticipated.
In order that’s a bit of bit conflicting, however I simply wish to name out that principally 24% of Individuals are saying that they’re going to cancel or they’re going to delay making main purchases like shopping for a house, and that kind of is sensible as a result of whenever you take a look at how the shutdown is enjoying out, pay has been suspended for about 2 million federal staff. There are three quarters of 1,000,700 and 50,000 who’ve been furloughed and the remaining are anticipated to work with out compensation. Usually, I believe throughout earlier shutdowns we’ve seen that these folks will get again pay as soon as the federal government reopens, however the White Home has stated that they’re contemplating not paying furloughed federal workers for the time they didn’t work through the shutdown. So all of these items have actually led to plenty of uncertainty for these federal staff, and I’m positive there are different individuals who aren’t federal staff who’re simply trying on the chaos in Washington proper now and are saying they don’t wish to make a significant buy.
Given all this uncertainty, there’s additionally a ton of different Individuals who work for personal firms, however they don’t receives a commission. They don’t go to work as a result of their work depends on authorities initiatives. So all these items are combining to influence the housing market very straight. That’s the very first thing. There’s a second factor although that I’m unsure everybody has seen, however when the federal government shut down on October 1st, the Nationwide Flood Insurance coverage Program lapsed that means that the federal government sponsored flood insurance coverage is not issuing new insurance policies, they aren’t doing renewals. When you’ve got an present coverage that’s ongoing that isn’t being canceled, however no new insurance policies, no renewals, and that’s pushing folks into the non-public marketplace for flood insurance coverage, which is way, way more costly. I used to be simply studying an article that confirmed a girl in Florida who had beforehand had a quote for $4,000 for annual flood insurance coverage for 2 bed room ranch already fairly costly.
Now, the 2 quotes she obtained for personal carriers have been $9,000 and $12,000. So for one, the cheaper another than double for the costlier one, it was triple the federal government program. Due to this elevated price and uncertainty, NIR is estimating that that is going to stop or delay 1400 closings a day throughout the nation. Now, on a nationwide degree, in fact, 1400 closing a day might be not going to essentially present up within the information, however what’s attention-grabbing and unlucky about that is that the areas of the nation which can be in these floodplains, and it’s really greater than you consider 8% of all properties within the US are in areas that require this sort of flood insurance coverage from most lenders, however most of these 8% of properties are in states which can be on the Gulf Coast, proper? You see Florida, Alabama, Louisiana, Texas, and these are areas of the nation which can be already getting hit by a housing correction, and so whenever you mix these items collectively, proper, whenever you take a look at the correction that’s already occurring, it’s fairly dangerous in Florida proper now in Louisiana, different locations are seeing extra modest corrections, nevertheless it’s undoubtedly going to chill the market additional, 1400 gross sales in Florida proper now is definitely fairly vital, and the sellers who’ve had their properties listed for months and are actually keen to shut and really promote their properties, these delays and these cancellations are going to be notably painful.
Hopefully, the federal government will attain an settlement quickly and the Nationwide Flood Insurance coverage Program will restart issuing insurance policies and renewals, however within the meantime, it may get a bit of ugly there, particularly if you should get non-public insurance coverage whilst a cease hole in the meanwhile whereas the federal government is shut down. Now, I used to be studying that in some situations it’s attainable for present owners to assign their flood insurance coverage to a purchaser. So when you’re one in all these people who find themselves in a scenario the place the customer’s backing out or eager to delay as a result of they will’t get flood insurance coverage, I might advocate trying into this, name your supplier and see when you can assign it over as a result of that may be a approach that you may really get by means of this shutdown and really shut on a property. You would do that when you’re a purchaser too. If you’re a purchaser and also you wish to really shut on these properties, see if you may get the vendor to assign you their insurance coverage program.
Once more, it doesn’t work in all situations, not all carriers are going to do this, nevertheless it’s price exploring when you occur to be on this unlucky circumstance proper now. So we’ll have to only see how this performs out, however as of now, these are the 2 essential methods the shutdown is impacting the housing market. We obtained to take another fast break, however once we come again, I wish to speak about simply a few information units I’ve been not too long ago that present extra indicators of financial weak point even exterior of the labor information that we’re getting and what this would possibly imply for the market. We’ll be proper again.
Welcome again to On the Market. I’m Dave Meyer. Now let’s simply speak about a pair indicators of financial weak point. Now, I absolutely admit the economic system is completely polarized. There are indicators that the economic system is robust. We’re seeing the inventory market close to all time highs. Gold is actually excessive, which you could possibly argue isn’t an indication of financial power, however asset costs are excessive. Bitcoin is close to all time excessive too. Some folks suppose that’s due to its hedge. Some folks would possibly say that’s financial power, however once more, there are all kinds of blended indicators within the economic system proper now, however a pair issues got here out this week, the week of October sixth that simply present a pair issues that I believe are a bit of regarding when it comes to the general economic system, and I simply wish to speak about them and the way they could influence the housing market and economic system normally.
The primary up is automobile loans. Now, I’ve stated on the present numerous occasions, and it’s nonetheless true, the typical American house purchaser stays in fine condition. We’re not seeing large upticks in foreclosures or delinquencies. They’re very minor for essentially the most half. They’re properly beneath pre pandemic ranges. We do see some upticks in VA and FHA loans, however nothing at a regarding degree proper now. However whenever you’re trying on the power of the economic system, you usually wish to take a look at the standard of the debt that’s on the market as a result of what usually results in recessions is when folks can not service their debt, they go bankrupt, they default. That causes these ripple results all through the economic system, so these are issues that you simply at all times wish to keep watch over. The automobile mortgage information is getting just a bit bit worrisome. It’s not loopy or something like now, however what we’re seeing is that the portion of auto loans which can be 60 days or extra overdue which can be subprime hit a report of greater than 6%.
That’s the highest they’ve been in any of the info that I’ve seen going again to 2000, and that features the monetary disaster after they peaked a bit of bit beneath 5%. Now, it’s essential to notice that subprime auto loans are usually not an enormous portion of the market proper now, however prime loans, which is principally loans made to extra certified consumers are additionally going up. They’re in no way time highs, however they’re kind of again close to pre pandemic ranges they usually’re on an upward trajectory, so each trending in that route. We additionally see that an estimated 1.75 million automobiles have been repossessed final yr. That’s the best whole since 2009, and it seems to be like automobile sellers are literally decreasing their credit score requirements, which is one thing I at all times fear about having come into the economic system and the housing market through the nice monetary disaster, I by no means like seeing lenders decrease their credit score high quality requirements, however we’re seeing proper now the share of recent automobile consumers with credit score scores beneath six 50, which is near subprime, was almost 14%.
That’s one in seven folks. It’s the best it’s been in 9 years, and so it simply reveals an total weakening of the American automobile proprietor, and I’m not tremendous involved about this proper now as a result of it’s nonetheless a comparatively small portion of the market, however these are tendencies that we should always be careful for once we’re evaluating the economic system. However there was one stat that I needed to share with you all. That is really insane. New automobile costs are simply, they’re wild proper now. The common month-to-month fee in the US, the typical for all folks is greater than $750. That’s completely wild. That may be a loopy amount of cash. That’s $9,000 in post-tax cash per yr going in the direction of the typical automobile. No marvel persons are struggling to make these funds that’s so costly. Perhaps I’m simply previous and my expectations of what automobile funds needs to be is like $350, however man, that appears excessive and almost 20% of loans and leases, automobile funds are actually above a thousand {dollars} in month-to-month funds.
That simply rubs me the flawed approach. It simply makes me a bit of bit involved. Once more, I’m not attempting to be alarmist, however that is one thing I’m undoubtedly going to maintain a watch out, particularly amongst a few of the different information that we’re seeing. Scholar mortgage delinquencies are up, we’re seeing bank card delinquencies up a bit of bit, so that is simply including to the image that we’re seeing throughout the economic system proper now. For essentially the most half, American customers, their emotions in regards to the economic system are down from a yr in the past, however they haven’t actually modified during the last couple of months. There may be this index of shopper sentiment. I talked about this lots as a result of it may be an indicator of the place the economic system goes and what it’s exhibiting proper now could be that shopper sentiment was principally unchanged month over month. It really simply went down barely from September, 2025 to October, 2025, however actually large decline yr over yr.
So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% lower yr over yr, which is down lots. We see the index of shopper expectations of the economic system dropping 31% yr over yr, so clearly Individuals in comparison with a yr in the past feeling worse in regards to the economic system. Now, this research is definitely put out by the College of Michigan, they usually put out this actually attention-grabbing chart that I believed was sort of fascinating and wished to share. It reveals that sentiment and expectations for individuals who don’t have any inventory holdings are simply plummeting. In the meantime, individuals who have massive inventory holdings are literally beginning to really feel higher and higher in regards to the economic system, so it simply continues to indicate that in the US proper now we’ve kind of two totally different economies occurring. Individuals on the very high of the revenue bracket are typically doing properly.
We’ve seen information that reveals that fifty% of spending within the economic system proper now are coming from the highest 20% of the market, and their expectations are high-quality. They’re feeling good in regards to the economic system. In the meantime, different customers kind of within the decrease finish of this socioeconomic bracket, they’re not feeling good in regards to the economic system, and that might be an indication that they will pull again on spending much more within the coming months. So that is one other factor that we have to be careful for. Lastly, that is simply fast, however I really noticed this attention-grabbing information on realtor.com that confirmed that 22 states, so almost half of all states are both in a recession or in a better danger of a recession. These are states, they’re actually simply unfold out all through the nation. You see some within the northeast, like in New England, you see some in the course of the nation, Wyoming, Montana, South Dakota, Illinois, a pair within the south in Mississippi and Georgia up within the Pacific Northwest in Washington and Oregon.
They’re fairly unfold all through the nation besides the southwest of the nation. That appears to nonetheless be a brilliant spot. Not all of them are rising. We see California, Nevada, Colorado, New Mexico. They’re kind of treading water. Identical factor with another states like Missouri, Tennessee, Ohio, New York, after which there are plenty of states which can be persevering with to develop. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All nonetheless persevering with to develop, nevertheless it does once more present that plenty of the nation, whenever you see all this complicated financial information, it’s as a result of it’s all actually segmented. It is dependent upon what state you’re residing in. It is dependent upon the place on the revenue bracket you’re in. It is dependent upon how a lot inventory and gold and Bitcoin you personal, so in case you are feeling actually disconnected from the headlines that you simply’re seeing, it is sensible as a result of the headlines are broad generalizations and it’s actually exhausting to make broad generalizations in regards to the economic system proper now.
It’s completely totally different relying on who you’re, the place you reside, what your job is, what sort of belongings you spend money on, and so simply keep in mind that you bought to go a degree deeper within the information. However I’m bringing this all up as a result of a few of this recession danger might be mirrored in mortgage charges going ahead. Once more, as you could know, when there may be danger of recession, that usually pushes down mortgage charges, which may convey again some extra affordability to the housing market, but when that occurs, and the way a lot that occurs will largely rely on inflation information, as a result of if inflation information goes up, it’ll most likely counteract this recession danger. Mortgage charges will keep the identical, but when inflation begins to degree out and we see extra of this recession danger, clearly nobody needs a recession, however the one silver lining of that may be barely decrease mortgage charges within the weeks or months to return.
That’s why I wished to convey this up, and it’s one thing we’ll hold a watch out for right here in the marketplace. That’s my replace for as we speak, October 14th. Thanks all a lot for listening to this episode of On The Market. Don’t neglect, if you wish to see extra in the marketplace occasions in your native space, be certain to depart us a remark both on YouTube or Spotify. We’d love to listen to what you wish to see out of in the marketplace occasions. We’d like to see you in your native market. I believe it’d be plenty of enjoyable, however we simply wish to determine what precisely that ought to appear to be. Thanks once more for listening. I’m Dave Meyer. See you subsequent time.