Overview

Introduction

At any given moment, there is no shortage of commentary about the housing market. Monthly data releases, attention-grabbing headlines, and short-term swings can easily create the impression that the market is either on the verge of a major shift or stuck in perpetual uncertainty. While these snapshots can be useful, they often miss the broader forces that shape real estate decisions over time. Real estate is rarely driven by a single factor. Instead, it reflects the intersection of affordability, economic confidence and stability, and financial or political uncertainty with a fundamental need for housing. By looking at how these elements interact, rather than isolating one metric, we can better understand why the market has behaved the way it has and what signals are worth paying attention to as conditions continue to evolve.

Uncertainty and Expectations 

Current uncertainty remains elevated and continues to center on a number of issues. On a macro level, tariffs, trade policy, immigration, and global conflict have been cited in consumer sentiment surveys. In addition, personal financial pressures that have been noted over the past year included persistently high prices, interest rates, taxes, and insurance. However, as inflation expectations have eased and optimism around interest rates has begun to stabilize following the Fed’s third rate cut late in 2025, consumers are seeing things more optimistically looking forward. There is no doubt that broader stock market gains of 15-20% helped buoy the luxury real estate market, but for the average household, views of current financial conditions have weakened. This is a bit of a paradox, however, as while on average consumers are admittedly feeling some pain, expectations for future financial health have improved and have been steadily on the rise since the lows of April 2025 (height of tariff fear). See Chart 1. This highlights the gap between present strain and longer-term hope. Taken together, this points to a consumer base that remains uncertain, but not paralyzed, and increasingly focused on navigating the environment ahead rather than waiting for clarity to arrive. 

Affordability

Affordability has been at the center of the housing conversation for several years, but the nature of that conversation has changed. Often affordability has been viewed primarily through the lens of home prices. However, the rising interest rate environment from 2022 to early 2025 served to escalate the affordability issues. The third primary piece to the matrix is wages and how that relates to inflation. As we have discussed in prior editions of this report (Access our archives), there were periods where inflation was drastically outpacing wage growth. Throughout the country, borrowers were spending a larger than recommended portion of their income on housing, and this has created great strain on the average borrower. However, with mortgage rates declining by approximately 1% from the start of 2025 and 2% since the highs from late 2023, this is finally giving borrowers some relief. See Chart 2. 

Also, with wage growth now outpacing inflation by about .9%, this puts buyers in a better financial position on a monthly basis. In fact, in 3 of the last 4 years, with home prices flat to slightly higher, wage growth has outpaced home price growth as well, and experts are calling for this to continue into 2026. See Chart 3. One important thing to note is that affordability constraints or improvements do not automatically translate into falling or rising prices. Instead, they often show up as changes in the number of transactions, length of time on market, number of new listings coming to market, etc. Affordability is one piece among many that plays into the balance between supply and demand, and any imbalance is usually what leads to price movement. 

Inventory, Sales Activity, and Market Balance

Inventory levels have risen from historic lows, but they have done so in a gradual and moderated way. We are still seeing the seasonal cycles that one would expect, with more listings coming to the market in spring and fewer options at the end of the year. In the spring of 2025, we matched the inventory that we had grown accustomed to in the years leading up to the pandemic.  See Chart 4. Also, visible in this chart is that the drop-off of inventory at the end of 2025 was steeper than normally happens in any given year. In fact, there were more expired, canceled, and withdrawn listings at the end of 2025 than there have been in over 10 years.  See Chart 5. What this tells us is that in 2025, sellers stepped back into the market, possibly hoping for elevated prices. Unwilling to lower prices or make the adjustments to their marketing or presentation to get their home sold, sellers instead opted to remove the home from the market. Often, this can lead to buyers thinking sellers are unreasonable across the board. However, the reality is that a home often means something deeper to an owner. If there aren’t strong fundamental reasons compelling them to move, the decision to not sell it for less than what makes sense to them, while avoiding the costs and hassle of moving, often makes good sense. After all, a seller usually needs to buy something as well. If the math is off, no action could be the best option.

What does all this mean for prices? Well, as we mentioned in a previous section, when you have buyers wanting/needing to move and you have the number of available homes remaining relatively stable, you get a market that moves more horizontally than vertically. See Chart 6. Prices tend to drop when inventory grows to excessive levels and isn’t met with demand or increases when buyer demand exceeds seller inventory. Neither of these scenarios are occurring. What we have here feels like a fairly balanced market with buyers and sellers meeting in a general price range which has been established over the course of a number of years. Until one side of the supply/demand equation takes hold, we would expect to continue to see this pattern. 

Final Thoughts

While data provides essential context, it is only part of the decision-making process. Every move is driven by personal circumstances, whether that is a new job, a growing family, a desire to simplify, or a change in lifestyle priorities. Our role is to help interpret what the data means in light of those individual goals. We believe that informed decisions come from understanding both the numbers and the human factors behind them. If this report helps clarify the current landscape and supports thoughtful conversations about what comes next, then it has served its purpose. We would welcome the opportunity to discuss how these broader trends intersect with your specific plans and help you move forward with clarity and confidence.