Home sales flatlined amid unaffordable conditions after rising demand collided with tepid supply growth, pushing up home prices. Would-be buyers became so discouraged that demand cooled and remains slow.
Prices are now becoming more favorable for house hunters, a trend that should continue in 2026 and change the narrative in the housing market.
In addition to potential buyers giving up on finding an affordable home, sellers have been giving up on finding someone willing to buy at the price they want.
Simonsen said listing withdrawals tend to be owner-occupied homes, meaning they could be latent demand as well as supply. That’s because two transactions would be needed: owners want to buy a new home but must sell their current one.
“In an environment where conditions improve a little bit, we actually estimate that that’s a representation of shadow demand—people that want to move, people that have delayed moves for maybe four years now,” he said, adding that there are about 150,000 such homeowners.
His housing market outlook for a new era of improving affordability doesn’t depend on a steep drop in mortgage rates. In fact, a plunge might spur so much demand that prices would overheat.
Simonsen expects rates to stay in the low-6% range, allowing sales to grow while also keeping home prices in check as more inventory comes on the market.
