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

Dave:
We’re solely midway by October and it has already been a wild one for the housing market. We’ve acquired a authorities shutdown, we’ve acquired indicators of recession, we’ve acquired extra sellers leaping into the market, however are patrons biting? We’ll cowl this and extra on at this time’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 wonderful days in Vegas at BP Con 2025. Hope a few of you had 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 12 months. I feel in case you had been there you’d know that and I used to be there in fact, however so had 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 social gathering on the closing social gathering. Jane did an excellent session on flipping ways and doubtless closed 5 offers whereas on stage and I gave a keynote in regards to the realities of investing in 2025 and acquired completely wrecked enjoying craps. It was all glorious. I had the time of my life and I can’t look ahead to subsequent 12 months, which occurs to be in Orlando. We introduced it the final day of the convention, so in case you didn’t make it this 12 months, undoubtedly take a look at subsequent 12 months’s convention. I promise you’ll have enjoyable. By the best way, earlier than we get into at this time’s episode, I wished to say that we’re enthusiastic about doing extra kind of small and native occasions for BiggerPockets within the coming 12 months, so I’d like to know within the feedback if that’s one thing that you just’re keen 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 will plan extra neighborhood occasions and get togethers in 2026. Alright, now let’s discuss all of these items that has been happening since BP Con began. There’s loads happening in fact, however at this time we’re going to deal with a pair issues. We’ll have 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 may also discuss how the federal government shutdown is definitely impacting the housing market perhaps greater than individuals notice, and we’ll additionally discuss how there are indicators that the financial system generally is softening. Let’s soar in. First up, let’s discuss housing costs as a result of we simply acquired the case Schiller Nationwide Index for July and what it confirmed is that residence costs nationally are up 1.7% 12 months over 12 months, in order that they’re nonetheless up, however they’re displaying 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 truly seen month over month residence costs fall 5 consecutive months and simply as a reminder, again in January, the 12 months over 12 months 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 at this time and there’s tons of various worth information, they’re all sort of displaying 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 in case you extrapolate out this development the place we had been beginning the 12 months at 4.2%, now we’re at 1.7%, we’re in all probability going to be very near flat by the top of the 12 months, 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 could have a look at which are slightly 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 houses rose 2.3% 12 months over 12 months, so that is simply individuals who select to place their property in the marketplace. That’s up 12 months over 12 months and it’s not up loopy 2.3%, but it surely’s the largest enhance we’ve seen in over three months. Really over the summer time we noticed fewer and fewer individuals selecting to listing their residence in the marketplace. I feel that’s in all probability as a result of charges had been nonetheless excessive and we’re getting into this correction and sellers had been simply pondering, you understand what? I’m not going to promote into this adversarial market. I’m simply going to attend it out. However now that we’re in the midst of October, I’m recording this on October tenth and simply a few weeks in the past, the fed lower charges charges are about 6.35% as of at this time, however they did dip slightly bit nearer to six.1, 6.2, and so I feel what occurred is numerous sellers listed their residence in September hoping that these decrease charges would herald further patrons that weren’t actually materializing over the summer time, however sadly that’s not what’s occurring.
Actually, pending gross sales, the variety of contracts principally which have been formulated during the last couple of weeks truly fell to 1.3% from a 12 months in the past, so not loopy, however once more, it’s the largest 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 12 months. It’s additionally longest it’s been since principally earlier than the pandemic since September of 2019. And so once you have a look at all this stuff collectively, in case you have 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 stage.
I truly suppose at this level that’s in all probability fairly doubtless. I haven’t but made my predictions for 2026, however in case you keep in mind my predictions for 2025 is that we’d be fairly near flat and it’s wanting like that one’s going to be spot on. I do know that may be scary for individuals within the trade like brokers, lenders or buyers, however I simply need to remind everybody that that is okay. That is regular. That is a part of a standard 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’re going to have extra negotiating energy once you’re speaking to sellers as a result of they’re going to be competing for a restricted pool of patrons. The second factor is that issues are going to be on sale. You may be capable to truly get properties for cheaper than you’ve during the last couple of years.
And the third factor that’s I feel extraordinarily essential for the housing market is that affordability is definitely getting higher within the housing market. I do know it’s not loads higher, however in case 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 now have a protracted method to go, don’t get me fallacious, however we acquired to cease someplace. We acquired to see the tide flip and it has slightly bit, and I do know that’s not nice for on paper when everybody’s seeing the fairness worth of their houses, however if you wish to get again to a housing market that’s wholesome, which I definitely do, I feel that is truly one thing that’s comparatively optimistic. 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 de facto what I feel 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 acquired 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 may not notice. We’ll be proper again.
Welcome again to On the Market, Dave Meyer right here speaking about current updates out there simply gave you my housing market information. Now transferring on to authorities shut down. I do know that this stuff occur and generally you’re unaffected by it and I feel in all probability for the typical American who’s not seeking to make a significant buy or doesn’t work within the trade or is in fact not a authorities worker who’s straight impacted by the shutdowns and furloughs, you may probably not really feel the influence of the shutdown, however there’s some information that exhibits that the housing market is being impacted. First, I’ll simply share with you a survey that Redfin simply did with Ipsos, and it exhibits that 17% of People 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 truly 16% stated that they could make a significant buy earlier than anticipated.
In order that’s slightly bit conflicting, however I simply need to name out that principally 24% of People 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 smart as a result of once you have a look at how the shutdown is enjoying out, pay has been suspended for about 2 million federal employees. There are three quarters of 1,000,700 and 50,000 who’ve been furloughed and the remainder are anticipated to work with out compensation. Usually, I feel throughout earlier shutdowns we’ve seen that these individuals 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 staff for the time they didn’t work in the course of the shutdown. So all of this stuff have actually led to numerous uncertainty for these federal employees, and I’m positive there are different individuals who aren’t federal employees who’re simply wanting on the chaos in Washington proper now and are saying they don’t need to make a significant buy.
Given all this uncertainty, there’s additionally a ton of different People 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 this stuff 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 which means that the federal government sponsored flood insurance coverage is not issuing new insurance policies, they aren’t doing renewals. When you have an current coverage that’s ongoing that’s not being canceled, however no new insurance policies, no renewals, and that’s pushing individuals into the personal 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 acquired for personal carriers had been $9,000 and $12,000. So for one, the cheaper yet one more than double for the dearer one, it was triple the federal government program. Due to this elevated value and uncertainty, NIR is estimating that that is going to stop or delay 1400 closings a day throughout the nation. Now, on a nationwide stage, in fact, 1400 closing a day might be not going to actually present up within the information, however what’s attention-grabbing and unlucky about that is that the areas of the nation which are in these floodplains, and it’s truly greater than you consider 8% of all properties within the US are in areas that require this type of flood insurance coverage from most lenders, however most of these 8% of properties are in states which are on the Gulf Coast, proper? You see Florida, Alabama, Louisiana, Texas, and these are areas of the nation which are already getting hit by a housing correction, and so once you mix this stuff collectively, proper, once you have a look at the correction that’s already happening, it’s fairly dangerous in Florida proper now in Louisiana, different locations are seeing extra modest corrections, but it surely’s undoubtedly going to chill the market additional, 1400 gross sales in Florida proper now is definitely fairly important, and the sellers who’ve had their properties listed for months and are actually keen to shut and really promote their houses, these delays and these cancellations are going to be significantly 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 slightly ugly there, particularly if it’s worthwhile to get personal insurance coverage whilst a cease hole in the intervening time whereas the federal government is shut down. Now, I used to be studying that in some situations it’s doable for present householders to assign their flood insurance coverage to a purchaser. So in case you’re certainly one of these people who find themselves in a state of affairs the place the customer’s backing out or eager to delay as a result of they will’t get flood insurance coverage, I’d advocate wanting into this, name your supplier and see in case you can assign it over as a result of that is perhaps a manner that you could truly get by this shutdown and really shut on a property. You would do that in case you’re a purchaser too. If you’re a purchaser and also you need to truly shut on these properties, see if you will 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, but it surely’s value exploring in case 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 fundamental methods the shutdown is impacting the housing market. We acquired to take yet one more fast break, however once we come again, I need to discuss simply a few information units I’ve been taking a look at lately that present extra indicators of financial weak spot even outdoors of the labor information that we’re getting and what this may imply for the market. We’ll be proper again.
Welcome again to On the Market. I’m Dave Meyer. Now let’s simply discuss a pair indicators of financial weak spot. Now, I absolutely admit the financial system is completely polarized. There are indicators that the financial system is powerful. We’re seeing the inventory market close to all time highs. Gold is de facto excessive, which you would argue isn’t an indication of financial energy, however asset costs are excessive. Bitcoin is close to all time excessive too. Some individuals suppose that’s due to its hedge. Some individuals may say that’s financial energy, however once more, there are all kinds of combined alerts within the financial 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 feel are slightly regarding when it comes to the general financial system, and I simply need to discuss them and the way they could influence the housing market and financial system generally.
The primary up is automobile loans. Now, I’ve stated on the present a lot of instances, and it’s nonetheless true, the typical American residence purchaser stays in good condition. We aren’t seeing huge upticks in foreclosures or delinquencies. They’re very minor for probably the most half. They’re nicely under pre pandemic ranges. We do see some upticks in VA and FHA loans, however nothing at a regarding stage proper now. However once you’re wanting on the energy of the financial system, you usually need to have a look at the standard of the debt that’s on the market as a result of what usually results in recessions is when individuals can not service their debt, they go bankrupt, they default. That causes these ripple results all through the financial system, so these are issues that you just at all times need to regulate. 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 are 60 days or extra overdue which are subprime hit a file 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 once they peaked slightly bit under 5%. Now, it’s essential to notice that subprime auto loans usually are not an enormous portion of the market proper now, however prime loans, which is principally loans made to extra certified patrons are additionally going up. They’re by no means time highs, however they’re kind of again close to pre pandemic ranges and so they’re on an upward trajectory, so each trending in that course. We additionally see that an estimated 1.75 million automobiles had been repossessed final 12 months. That’s the very best complete 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 financial system and the housing market in the course of 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 latest automobile patrons with credit score scores under six 50, which is near subprime, was practically 14%.
That’s one in seven individuals. It’s the very best it’s been in 9 years, and so it simply exhibits an general 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 traits that we should always be careful for once we’re evaluating the financial system. However there was one stat that I needed to share with you all. That is truly insane. New automobile costs are simply, they’re wild proper now. The common month-to-month cost in the USA, the typical for all individuals is greater than $750. That’s completely wild. That may be a loopy sum of money. That’s $9,000 in post-tax cash per 12 months going in the direction of the typical automobile. No surprise individuals 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 practically 20% of loans and leases, automobile funds at the moment are above a thousand {dollars} in month-to-month funds.
That simply rubs me the fallacious manner. It simply makes me slightly bit involved. Once more, I’m not making an attempt to be alarmist, however that is one thing I’m undoubtedly going to maintain a watch out, particularly amongst a number of the different information that we’re seeing. Pupil mortgage delinquencies are up, we’re seeing bank card delinquencies up slightly bit, so that is simply including to the image that we’re seeing throughout the financial system proper now. For probably the most half, American shoppers, their emotions in regards to the financial system are down from a 12 months in the past, however they haven’t actually modified during the last couple of months. There’s this index of shopper sentiment. I talked about this loads as a result of it may be an indicator of the place the financial system goes and what it’s displaying proper now’s that shopper sentiment was principally unchanged month over month. It truly simply went down barely from September, 2025 to October, 2025, however actually huge decline 12 months over 12 months.
So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% lower 12 months over 12 months, which is down loads. We see the index of shopper expectations of the financial system dropping 31% 12 months over 12 months, so clearly People in comparison with a 12 months in the past feeling worse in regards to the financial system. Now, this research is definitely put out by the College of Michigan, and so they put out this actually attention-grabbing chart that I believed was sort of fascinating and wished to share. It exhibits that sentiment and expectations for individuals who haven’t 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 financial system, so it simply continues to indicate that in the USA proper now we now have kind of two totally different economies happening. Individuals on the very prime of the revenue bracket are usually doing nicely.
We’ve seen information that exhibits that fifty% of spending within the financial system proper now are coming from the highest 20% of the market, and their expectations are positive. They’re feeling good in regards to the financial system. In the meantime, different shoppers kind of within the decrease finish of this socioeconomic bracket, they’re not feeling good in regards to the financial system, and that could possibly be an indication that they’re going to 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 truly noticed this attention-grabbing information on realtor.com that confirmed that 22 states, so practically half of all states are both in a recession or in the next 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 midst 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 vivid 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 numerous states which are persevering with to develop. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All nonetheless persevering with to develop, but it surely does once more present that numerous the nation, once you see all this complicated financial information, it’s as a result of it’s all actually segmented. It relies on what state you’re dwelling in. It relies on the place on the revenue bracket you’re in. It relies on how a lot inventory and gold and Bitcoin you personal, so if you’re feeling actually disconnected from the headlines that you just’re seeing, it is smart as a result of the headlines are broad generalizations and it’s actually onerous to make broad generalizations in regards to the financial system proper now.
It’s completely totally different relying on who you’re, the place you reside, what your job is, what sort of stuff you put money into, and so simply do not forget that you bought to go a stage deeper within the information. However I’m bringing this all up as a result of a few of this recession danger could possibly be mirrored in mortgage charges going ahead. Once more, as you might know, when there’s danger of recession, that typically pushes down mortgage charges, which may carry again some extra affordability to the housing market, but when that occurs, and the way a lot that occurs will largely depend upon inflation information, as a result of if inflation information goes up, it’ll in all probability counteract this recession danger. Mortgage charges will keep the identical, but when inflation begins to stage out and we see extra of this recession danger, clearly nobody desires a recession, however the one silver lining of that is perhaps barely decrease mortgage charges within the weeks or months to return.
That’s why I wished to carry this up, and it’s one thing we’ll preserve a watch out for right here in the marketplace. That’s my replace for at this time, 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, ensure to go away 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 feel it’d be numerous enjoyable, however we simply need to work out what precisely that ought to appear like. Thanks once more for listening. I’m Dave Meyer. See you subsequent time.