The real estate market is effecively frozen right now because buyers can't afford houses at the current rates and sellers are still holding out hope that they will come back down to 3%.
Once reality sets in we will start to see prices slowly adjust.
Once reality sets in we will start to see prices slowly adjust.
National average construction cost per square foot is $160. $160 * 2000 square feet is $320,000 sans the land which we can assume is 25% the cost of the home constructed on it. So we've magically hit the $400k number.
The only way home prices 'decline' is with population decline, coercion, a recession, or significant regulatory, cultural, and financial shifts.
~2 million people 55+ die every year in the US, and immigration has come to a halt. Not all of those folks will have owned a home, but the vast majority of them will have (first citation), and those homes will be sold. There will be no mass layoff recession due to structural demographics.
Could the US have encouraged more workers to go into the trades with better wages and unions to increase the rate at which the US built houses? Certainly, that was a policy path, and the path I would've chosen. Was impairing inbound immigration another path to destroy domestic housing demand to reduce competition for it when the choice was made to not use policy to increase unit delivery to increase supply (with rising interest rates causing existing home valuations to fall)? It appears so.
US Census: Annual Homeownership Rates for the United States by Age Group: 1982-2025 - https://www.census.gov/housing/hvs/data/charts/fig07.pdf
Population Decline Was Decades Away. Now It’s At America’s Door - https://www.bloomberg.com/news/newsletters/2026-01-31/popula... | https://archive.today/VVOUJ - January 31st, 2026
The US Is Flirting With Its First-Ever Population Decline - https://www.bloomberg.com/news/articles/2026-01-30/trump-imm... | https://archive.today/LdA0d - January 30th, 2026
US Population Growth Slows Sharply Due to Less Immigration - https://www.bloomberg.com/news/articles/2026-01-27/us-popula... | https://archive.today/ePDmG - January 27th, 2026
Map Shows 21 States Where Deaths Now Outnumber Births - https://www.newsweek.com/map-shows-21-states-where-deaths-no... - June 30th, 2025
US Population Set to Shrink by 2033 Without Immigration, CBO Says - https://www.bloomberg.com/news/articles/2025-03-27/us-popula... | https://archive.today/NdTvX - March 27th, 2025
- "The share of below-3% mortgages outstanding, by number of mortgages, declined to 20.0% of all mortgages outstanding in Q3, the smallest share since Q1 2021, and down from a share of 24.6% at the peak in Q1 2022 (red in the chart), according to data by the Federal Housing Finance Agency (FHFA)."
The Great Housing Freeze: Half of Homeowners Have a Sub-4% Mortgage Rate—and Few Reasons To Move - https://www.realtor.com/news/trends/outstanding-mortgage-rat... - October 22nd, 2026
- "Data from the Federal Housing Finance Agency's National Mortgage Database analyzed by the Realtor.com® economic research team shows that millions of homeowners are locked in to lower rates, with almost half (49%) holding a fixed rate below 4%."
These low rate mortgages will drain from the system over time, as the vast majority of notes are not assumable and will have to be satisfied at transfer.