"Helping buyers is an expected dip in adjustable-rate mortgages as the Federal Reserve continues to lower borrowing costs later this year, even as the 30-year fixed rate stays above 6%. On top of that, homebuilders will keep offering rate buydowns to lower mortgages to clear unsold inventory. "We think this could be enough, along with a rising wealth effect, to shift demand higher while supply increases subside," John Sim, head of securitized products research at JPMorgan, said in the note."
"A year of prices holding steady would mark further slowing after prospective buyers balked at stubbornly high prices last year, while more owners started putting their homes up for sale. The muted demand forced some sellers to pull their listings off the market or slash their asking prices. According to the Federal Housing Finance Agency's most recent data, home prices in November were up 1.9% from a year ago, down sharply from 4.8% annual growth in October."
Supply and demand dynamics are expected to keep national home price growth at 0% in 2026 after strong gains over the prior decade. Falling adjustable-rate mortgage balances and anticipated Fed rate cuts should improve buyer affordability, while 30-year fixed rates remain above 6%. Homebuilders will continue rate buydowns to clear unsold inventory, and a rising wealth effect may lift demand as supply increases subside. Price momentum slowed as buyers balked at high prices and more owners listed homes, with muted demand prompting withdrawals and price cuts. Pandemic-era construction surges have led to outright declines in markets with excess supply, notably parts of the West Coast and Sun Belt.
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