The Home Price "Stall" is ON | March 2026 Housing Market Update

TL;DR

Home prices are flat or slightly declining in real terms, creating rare buying opportunities as affordability improves and motivated sellers emerge.

Key Points

• 1.Home prices are nominally up ~1% but falling in inflation-adjusted terms. 40% of markets — mostly Florida, Texas, California, and the Southeast — are seeing outright price declines, while Northeast and Northwest markets still grow but at decelerating rates.
• 2.Sales volume rebounded from January's weather-driven 3.9M to 4.1M annualized, but remains far below the healthy 5–5.5M target. Despite mortgage rates falling from 7.1% to ~6%, buyer hesitation persists due to economic uncertainty.
• 3.Affordability has meaningfully improved, with the payment-to-income ratio now at 27%. The average mortgage payment has fallen nearly $200/month over the past year, and roughly 1-in-6 markets are now at historical affordability levels — up from near zero two years ago.
• 4.Inventory data is conflicting: Realtor.com shows active listings up 8% YoY while Redfin shows them down 2%. The key directional signal is that inventory growth is slowing — consistent with a soft correction rather than a crash spiral.
• 5.Insurance premiums rose 6% over the past year — double inflation — but that is the slowest growth rate since 2020. Since 2017, average monthly premiums have nearly doubled from $107 to $214, with insurance costs up 72% since COVID versus 35% for interest and 22% for principal.
• 6.Florida and Texas saw insurance cost decreases for the first time in years, some markets down 6%. California and parts of the Northeast continue to see double-digit increases, making regional underwriting critical.
• 7.Shopping insurance providers is a simple, underutilized strategy that saves an average of 5–10%, with Houston and Orlando investors saving $400–500/year. Only 11% of homeowners switch providers annually; investors should underwrite for 3–5% annual premium growth going forward.
• 8.New risks have entered the market: oil prices spiked from $65 to $100/barrel due to the Iran war before settling at $80, and the U.S. lost 92,000 jobs in February. Dave raises his crash probability estimate from 15% to 20–25%, though a full crash would require unemployment jumping from 4.5% to 7–8%.
• 9.The best opportunity is B and C class workforce housing and starter homes, not high-end assets. AI-driven white-collar job losses threaten demand at the top end, while blue-collar and healthcare employment remains strong, supporting rental demand and flip opportunities in lower price tiers.