Housing Market Update What Buyers and Sellers Need to Know RIGHT NOW!!

Overview

This video is a mid-year “housing market update” built around economist Steven Thomas’s 2026 forecasts and a check-in on how the market has behaved so far—especially mortgage rates, inflation, inventory, and what it implies for buyers and sellers.

1) 2026 Mortgage Rates: downtrend expected, but not fast

• Prediction: Mortgage rates settle back to a low 6% range (Thomas’s “base case” was roughly 6%–6.5%).
• Reality so far: Rates have largely stalled around 6.5%–6.75% for several weeks.

Main near-term drivers mentioned:

• Geopolitical risk tied to the Iran conflict (and its oil/inflation implications) has kept rates from falling as quickly as hoped.
• A jobs report (March 6) and shifts in market demand patterns.
• Thomas also argues AI-related fear/clickbait reduced buyer activity earlier in the year—so demand didn’t “respond” the way it typically does when rates hit around 6%.

2) End-of-Year Outlook: rates could fall, but depends on inflation and oil risk

Thomas suggests rates could improve later, contingent on whether geopolitical oil channels normalize (specifically referencing the Strait of Hormuz opening).

If inflation eases and the Fed adjusts its path, mortgage rates may drift down. He also references a possible scenario involving a December 25 bps rate increase (which could change the trajectory).

He frames this as “wait for evidence,” joking about needing to see “boats going by” / oil flowing.

3) Fed Expectations & the Inflation Debate: headline vs. Fed-preferred measures

The discussion references Fed leadership (including “Walsh”) and the possibility that commentary may conflict with earlier positions.

On inflation, Thomas emphasizes:

• Headline CPI is ~4% and needs to reach ~2%.
• The Fed focuses more on PCE (personal consumption expenditures), which Thomas says is less “broken” than CPI.
• Core PCE (excluding food and fuel) is described as the highest since Nov 2023, implying inflation pressure isn’t fully resolved.

Conclusion: inflation dynamics are still mixed, and that matters for the mortgage-rate trajectory.

4) Inventory: “rising” nationally—but still constrained

Thomas addresses a prediction about national housing inventory rising.

• What’s happening: Inventory is near last year’s levels and in many places slightly below it.
• The “uptick” is described as less about a big supply surge and more about:
  • Fewer listings than last year, plus
  • Slightly higher pending sales

He reframes “inventory rising” as inventory still being structurally low, especially compared with pre-pandemic norms.

5) Recession/Crash Risk: “no crash” because three crash ingredients aren’t present

Thomas challenges the idea that housing will crash, using a framework of three conditions:

1. Excessive oversupply
2. Low demand
3. Sellers who must sell (foreclosures, distress)

Key claims:

• Low demand exists (affordability problems from higher rates).
• But oversupply is missing: inventory is around ~1.55 million homes nationwide, peaking perhaps ~1.6 million, far below the ~4 million homes during 2006–2008.
• “Must-sell” sellers are also missing: high delisting/cancellation/withdrawn rates suggest homeowners are “hunkered down”—not forced to move and not willing to give up equity.

6) Market “downshift” and seasonality

• The host reports a recent slowdown over the past two weeks.
• Thomas attributes it to seasonality/gears in housing:
  • Spring market wind-down
  • Summer distractions (kids out of school, vacations, beach time, etc.)
• Expect another transition toward fall when school schedules return and decision-making resumes.

7) Days on Market vs. real speed: promoting “expected market time”

Thomas argues days on market can be misleading because median/average figures don’t fully capture the supply-and-demand snapshot.

He promotes a metric called “expected market time”:

• Based on a ~30-day snapshot of available homes and pending sales activity
• Intended to estimate when a listing is likely to become pending

Result: he says listings are taking longer than typical “days on market” suggests.

8) Price Reductions: not a collapse, but a pricing/strategy issue

• He cites price reduction activity where about ~34% of listings have at least one reduction.
• Interpretation: many sellers “test the market” with over-ambitious pricing, then reduce after insufficient demand.

Pricing counsel from the host and Thomas: precision pricing matters. Real deals are often limited to:

• Homes that have sat
• Listings with deferred maintenance
• Properties needing meaningful upgrades

9) 2026 Second-Half Conclusion: modestly “hotter” than last year, but rate-sensitive

Thomas expects:

• Rates roughly 6.25%–6.5% by later-year conditions (with upside if rates dip further).
• Rates currently above 6.5% (without points).
• Demand similar to last year, supported by prior rate improvements (especially Sept–year-end last year).
• Inventory slightly less than last year, which could make the market feel a bit hotter, though not like the “easy” periods when rates were much lower.

Key Takeaways for Buyers / Sellers (from the discussion)

• Mortgage rates are the central lever (“gas pedal” for pending/closed activity).
• Expect slower sales velocity now, but not necessarily a price collapse.
• Crash odds are low under Thomas’s supply-and-demand framework because there isn’t oversupply or forced selling like past downturns.
• Deals are mostly “surgical” (cherry-picked distressed/overpriced or long-sitting homes), not broad-based discounts.

Presenters / Contributors

• Steven Thomas — housing analyst / chief economist, Reports on Housing
• Audra — host / real estate agent (interviewer and commentator throughout)