Housing Starting To Become A Buyer's Market? | Ivy Zelman

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**Ivy Zelman** (0:59)
As we think about pricing for 2026, we're actually expecting nationally prices to be down 0.8 percent. And that's going to be weighted by those southeastern, southwestern markets that have gotten way too much inventory, again, predominantly from new construction that need to be moved. So they're the motivated sellers that are pushing price lower. So it's really a buyer's market. If you're in a highly concentrated home building market.

**Adam Taggart** (1:33)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. The real estate market remains a tangled mess. Commercial real estate has crashed hard under higher interest rates and tighter lending standards. However, higher mortgage rates have not brought down residential home prices, at least not on a national average yet. That said, transactions remain frozen up, languishing at the lowest level in decades. So where's this all headed? Are things likely to get better or worse from here? For answers, we're fortunate to speak with Ivy Zelman today. Ivy is the Executive Vice President and co-founder of Zelman & Associates, one of the most respected research firms advising investors and corporate executives on the real estate market over the past 30 years. Ivy, thanks so much for joining us today.

**Ivy Zelman** (2:22)
Thanks for having me. Nice to see you back.

**Adam Taggart** (2:24)
Thanks. It's a pleasure to have you back, Ivy. Happy summer. We chatted a little bit before we turned the camera on here. It's nice to hear you're finally getting good weather where you are. Maybe there's a parable here in the rough summer that you've had so far with the housing market. Housing market still remains an enigma, at least to the average person here.
We've had higher mortgage rates for longer than I think anybody has wanted in the real estate market. Obviously, as I mentioned, commercial real estate has already gone through its big correction. It's trying to pick itself off the floor. The retail housing market, I believe we're still at all-time record levels of unaffordability. There's a ton of aspiring buyers who can't get in. You've got a bunch of people who sort of feel trapped in their homes by the low mortgage rates that they're sitting on that they'd have to give up if they've had to move. So this is kind of where we were when you and I talked last year, but we're a year longer into this story. And we have seen more parts of the country sort of start to buckle, again, on the retail side of things, states like Florida, Texas. We're now seeing some weakness even in places like Tennessee and California start to spread. So a very bifurcated housing market, we still have a lot of strength and low inventory in some areas, but we're seeing some clear weakness and some real increases in inventory in other areas. But as I said in the intro, like the averages, the average price nationally hasn't really started coming down materially yet. Now, maybe this is the year it starts to do so. You would know better than I. Where are we right now? What is your current assessment of the state, of the housing market in the US right now?

**Ivy Zelman** (4:19)
Well, I think you characterized it well. The market has been kind of trending on the bottom, and we've been calling it a slow grind. I think and continue to expect that it will have more of the same over the next 12 months, and dependent upon what mortgage rates do. I mean, if mortgage rates come down considerably, helping to improve affordability, that might give us more of a pop in growth rates. But generally speaking, home prices, there's a divergence between markets that are now finally seeing inventories rising at higher levels, to higher levels than where we were pre-pandemic. Those markets are where we're seeing pricing decelerating, even pricing turn negative for a few. Then you have the markets where inventories are not increasing, and they're still well below where they were in 19, but they're still seeing pretty good price appreciation. A lot of that could be explained by production homebuilders in markets that are seeing inventory rise, that's where they're most concentrated. You mentioned Florida and Texas, for example, those states are seeing the most pressure, and part of which again is because there's a significant amount of supply that the production homebuilders have brought to the market.