Top Housing Researcher Ivy Zelman: Home prices will dip in 2026 before rebounding in 2027

Housing Market Outlook - Home prices are expected to decline next year before rebounding in 2027 [2] - A tale of two geographies: COVID winners decelerating with net migration under pressure and elevated resale inventory, while COVID losers in the Northeast and Midwest are seeing improving migration and employment [3][4] - Overall, all-in home prices are projected to be down about 8% in 2026, unless affordability improves significantly [5] Builder Strategies and Incentives - 73% of builders are aggressively buying down mortgage rates, with more than half buying down by more than 100 basis points [6] - Builders are offering mortgage rate buy-downs, with rates as low as 2.99% or 3.99% for one to two years, then 4.99% for the remaining 30 years [8] - Builders are motivated sellers due to spec inventory, and incentives will drive sales velocity [9] - Builders that are specking are doing so to offer mortgage rate buydowns and provide new move-in ready homes [13] Impact of Mortgage Rates - 30-year mortgage rates are hitting their lowest level since last October, boosting home builders [1] - Lower mortgage rates could improve affordability and bring more people into the market, potentially pushing prices higher [7] - The extent to which builders continue mortgage rate buydowns as prevailing mortgage rates come down will impact their margins [8][9]