June 15, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Adobe Podcast.

Hi, everyone. This is Taylor St Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence. And today I wanted to talk through the housing market.

It’s been a while since I provided a housing market update, and while I wish there was better news, it’s news regardless, I guess is the best way to put it, as we think about the housing market. It’s pretty clear to everyone out there that the housing market is struggling, and we would expect that struggle to really continue throughout the duration of this year. We do have the annual growth rate on the housing market improving as we move through the rest of 2026. But when I say improving, it really means getting less negative. We’re not really talking about any positivity as we look at a data series like US single-unit housing starts. This is one of our Trends Report series. We had April data when we delivered the last edition of the Trends Report. When we looked at the data through the end of April, single-unit housing starts were down about 6.9% from the year ago level. And we are expecting this plateau in the units number to continue, with a little bit of a downward bias through the rest of the year. And again, even though the growth rate will be improving, we’re still talking about a negative growth rate as we move through the duration of this year.

There are a number of factors that are leading to this housing market decline, the housing market challenge and the I guess, lackluster demand would be the best way I would describe it. As many of you know, the 30 year mortgage rate rose to about a nine-month high in late May. That was, continues to be a challenge from a mortgage rate perspective, along with the higher borrowing costs. We’ve seen the savings rate for consumers essentially plateau, and that’s due to a lot of the inflationary pressures that we’re dealing with, covered that on one of our recent TrendsTalk episodes here. So you’ve got bearish signs for buyer and builder sentiment right now out there, which again is just contributing to a lot of the weakness that we’re seeing in the housing market today. You know, a compounding factor on top of this is the fact that additional existing home inventory is coming on the market and that’s competing with new builds, and certainly some of the muted home sales that we’re seeing.

You know, one of the slides that I present when I’m delivering keynote presentations traveling the country, is this slide that shows the relationship between existing home sales to housing starts. And I often compare where we are today to the financial crisis of 2008, 2009. Not saying that’s where the housing market is today, but it gives us a little bit of a reference point to talk about the pain that we are seeing in the housing market. If you look at housing starts over the last twelve months, this is a twelve-month moving average, we’re at about 1.366 million. So 1.366 million over the last twelve months. If you compare that to the mid 2009 number, that was about 600,000 back in mid 2009. So we’re more than double what we were at the worst of really the housing market back in ’09. So starts are doing better even though they’re down relative to that time period. The reason I bring up 2009, though, is if you look at existing home sales, existing home sales are very similar to where they were at the bottom of that financial crisis in 2009. So in May of 2009, existing home sales totaled 4 million, that was the twelve-month moving average number back then. If you look at existing home sales today, we’re at 4.08 million. So we’re slightly higher than we were at the worst of the financial crisis, but existing home sales are trending comparative to that time period. So again, housing starts are helping out the housing market because that number is much higher than it was in ’08, ’09, but existing home sales is similar. And I’m not surprised by that because nobody wants to give up their mortgage. I mean, there are so many individuals in this country that have locked in that 4% and below mortgage rate, and that’s why existing home sales are so low. So yes, there are some more homes coming on the market on the existing side, but it is pretty challenging situation when I’m talking about comparing data today to the 2008, 2009 financial crisis.

It is clear that affordability remains a challenge. When I look at affordability throughout the country, you know, the Midwest is the one area that we are seeing some better than, better than normal, I guess better than average, comparing to the rest of the country starts, data. And that’s likely because the Midwest is a lot more affordable than what you see along the coastlines as you work either to the West Coast or the East Coast. So I know we have a number of clients that we speak to in the Midwest that are doing quite well from a home building standpoint, but that really seems to be the only pocket of the country that’s seeing a whole lot of benefit at this point in time. Most everyone is still in a negative affordability situation from a state level. We look at a chart that that I share often, again, in our keynote presentations, and it shows the average household income surplus or deficit needed to afford an average price home. And there are actually only two states where we see a positive affordability situation, and that’s Louisiana and West Virginia, and those happen to be two states that are losing people in terms of migration away from the state. Everyone else, every other state in the country is in a negative affordability situation, the worst being Hawaii. The the average household deficit to afford a home in Hawaii is about $157,000, compare that to California, which is about $124,000 at a deficit. But there’s places in the Midwest like Michigan that’s only at a $10,000 deficit, or Indiana is $10,000, Ohio $11,000. So, the Midwest is still in a negative affordability situation, but it’s a lot closer to break even than what you see on some of the extremes. And as I look at, you know, New England as well, New York, Vermont, Massachusetts, New Hampshire, New Jersey, all significant deficit numbers from those states. So again, it’s, it’s a challenging situation out there. Mortgage rates aren’t helping the situation as we sit here today. And so even though the growth rate for single unit housing starts is improving, it’s really that existing home sales market that we see a lot of the pain.

Consumers are hanging in there right now, and that is the one benefit to seeing that growth rate for the housing market get less negative as we move forward. But the consumers that are still generally flourishing in this economy tend to be the top 60% of income earners. The bottom 40% of income earners are seeing their cost in terms of food, housing and healthcare actually rising faster than the long run average. So I wouldn’t be surprised to still see some of the more affluent consumers moving around, because those tend to be the individuals that have a better income, better cost situation, relative to some of the lower income consumers.

So, folks, I wanted to give you an update on the housing market. Again, I wish I had better news for everyone out there, especially our home builders, but our view for 2026 is less negative rather than actually seeing any substantial growth as we move forward. Again, single and multi-unit housing starts are forecasts in our Trends Report, so head over to our Trends Report if you want more information here and I’ll continue to keep you updated, we do have better forecasts for the housing market in ’27 and ’28. And as we move deeper into this year, I’ll provide you with another update on how we’re seeing future years. But for now, thanks so much for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcasts, and I look forward to seeing you on the next one. Thanks so much. Take care for now.