Published on and written by Cyril Jarnias
The U.S. housing market in 2026 barely resembles the post-Covid frenzy. Behind a deceptive national average—prices rising only about 1 to 2 % per year, sales slowly recovering, and rates hovering around 6.3 %—lies a far more contrasting map. Major coastal metros, Rust Belt cities, and the Sun Belt are each living a different story.
Affordability, internal migration flows, and the correction in the Sun Belt after the 2020-2022 boom are shaping the market. Data from NLIHC, NAR, AEI, S&P Case-Shiller, Zillow, and Realtor.com show an affordability crisis, with the beginnings of a ‘Great Housing Reset’ where incomes are growing slightly faster than prices.
A National Market Stagnating, Regions Diverging
On the surface, the 2026 market is “calm.” The national S&P Cotality Case‑Shiller index shows barely 0.9 % annual growth in January 2026, down from over 4 % the previous year. The national median price hovers around $403,700, with year-over-year growth of about 1.2 %, the slowest pace since 2018. That’s a far cry from the 30 % cumulative increase seen between early 2020 and the 2022 peak.
The AEI (American Enterprise Institute) measures annual appreciation of just 1 % in the spring, and even forecasts slight declines for 2026, 2027, and 2028. In its scenario, prices fall about 1 % this year, then 2 % in 2027 and 2028. Other forecasts are slightly more optimistic, predicting +1 to +2.2 % per year. But all agree on one point: the era of double-digit gains is over.
Wages are growing by about 3.5 to 4 % per year, slowly closing the gap between incomes and home prices.
Affordability Index and Rates: A Little Breathing Room, No Miracle
The rate environment doesn’t help, but it no longer explains everything. The 30-year fixed rate has fallen from its 2023 peaks of 7.8 %, but it remains above 6 % most of the time in 2026. The average hovers around 6.3 % for the year, down from 6.6 % in 2025. Some forecasts see it briefly flirting with 5.9 % late in the year, but no one anticipates a return to the 3 % rates of the Covid era.
The NAR’s Housing Affordability Index remains about 35 % below its pre-Covid level. It has recovered somewhat, hovering around 113.7 in spring 2026, but still far from historical norms. At its worst, it required over $110,000 in annual income to afford the median home. In 2026, the median U.S. household earns around $80,000, while buying the median home ($435,000) requires roughly $113,000 in income to keep housing costs under 30 % of gross income.
The table below summarizes this gap between incomes and the affordability threshold:
| Indicator | Approximate 2026 Value |
|---|---|
| Median annual household income | ~$80,000 |
| Median home price for purchase | ~$435,000 |
| Income required for that median home | ~$113,000 |
| Gap: required income vs. median income | ~+29 % |
| Share of listings affordable to a median household (top 34 metros) | >30 % in only 11 metros |
According to a Bankrate analysis, more than 75 % of homes for sale are financially out of reach for the average household. In markets like Miami, Los Angeles, or San Diego, in the middle of summer 2026, less than 2 % of listings were considered affordable for a typical household.
A Lock-In Effect That’s Barely Easing
The market structure remains heavily shaped by the ultra-cheap mortgages of 2020–2021. More than 80 % of U.S. homeowners still hold a rate below 6 %, and a very large share—about 20 %—benefit from loans under 3 %. Selling to buy again at a rate above 6 % often means a skyrocketing monthly payment: enough to hold back a large portion of potential sellers.
Each year, 5 to 6 million new loans are originated at current rates, mechanically reducing the weight of earlier low-rate mortgages.
An Affordability Crisis Hitting Everyone, Everywhere
Behind these averages lies a much harsher reality: for a huge portion of the population, homeownership is closing off. The AEI Housing Center study even speaks of the “de-democratization” of American housing.
Homeownership Declining Across All Age Groups
In two decades, from 2000 to 2022, homeownership rates fell by 8 to 10 percentage points in every age group. For 35-year-olds, it dropped from 60 % to 50 %. For 40-year-olds, from 70 % to 59 %. Even 50-year-olds, historically highly likely to own, saw their rate fall from 78 % to 69 %. The 30–39 age group, the primary first-time buyer cohort, went from about 60 % to under 50 %.
The loss is concentrated among low- and moderate-income households. In 2022, only 25 % of families earning between $50,000 and $75,000 owned their home. In the $75,000–$100,000 bracket, the homeownership rate barely exceeds 30 %. At the other end, 70 to 80 % of households with annual incomes above $175,000 have achieved the “American dream.”
The AEI finds that within every age group, the wealthiest are capturing a growing share of owned homes, while income-stressed households are losing ground.
AEI
Housing Shortages and the Soaring Cost Burden
The problem extends far beyond buyers alone. The country faces several simultaneous shortages: a shortfall of more than 4 million homes overall according to Realtor.com, a deficit of 3.8 million entry-level units, and a lack of more than 7 million truly affordable rental units for extremely low-income households, according to the National Low Income Housing Coalition (NLIHC) “The Gap” 2026 report.
The NLIHC quantifies the gap for very low-income renters (at or below 30 % of area median income or the poverty line, whichever is higher) as follows:
| Indicator (very low-income households) | National 2026 Value |
|---|---|
| Number of very low-income renter households | ~11 million |
| Shortage of available & affordable rental units | ~7.2 million |
| Affordable units available per 100 households | 35 on average |
| States with no adequate supply | 50/50 (no state has a surplus) |
| Share of these households spending > 50 % of income on rent/utilities | 74 % |
In states like California, Oregon, or Nevada, there are fewer than 30 affordable rental units for every 100 households in need. Local shortages range from 7,154 missing units in South Dakota to nearly one million in California.
Only a quarter of eligible households receive assistance, and waitlists are enormous. Federal programs are underfunded: the Trump administration plans more than $26 billion in cuts to the HUD budget in 2026, and Emergency Housing Vouchers risk running out of funds as early as mid-year.
Renting vs. Buying: The Clear Tilt Toward Renting
In this context, renting has massively become the more economical short-term option. According to LendingTree, in the 100 largest U.S. metros, the monthly cost of renting is lower than owning in nearly every case. CBRE estimates that, on average, owning a home costs more than twice as much as renting, once interest, property taxes, insurance, and maintenance are factored in.
Financing figures confirm this: by mid-2025, the average homeowner had about $181,000 in untapped equity in their property. But this equity is mostly in the hands of existing homeowners. First-time buyers remain locked out: their share of transactions hovers around 21 %, near historic lows, with a median age that has crept up to 40.
Major Metros: Northeast and Midwest Heat Up, Sun Belt Normalizes
Zooming into major cities, the national average becomes almost anecdotal. The 10-City Case-Shiller index still shows +1.5 to +1.7 % annual growth in early 2026, while the 20-City index hovers around +0.9–1.2 %. But the gaps between metros are dramatic.
New York, Chicago, Midwest/Northeast: The “Refuges” of 2026
The most dynamic regions in terms of prices are now… far from the Sun Belt. The Midwest and Northeast, long seen as laggards, are becoming the engines of growth, thanks to return migration, limited supply, and relatively better affordability.
A few figures speak for themselves:
| Region / State | Average Annual Price Increase | 2026 Highlights |
|---|---|---|
| Midwest | ~3.6 % | Good price/sq. ft. ratio, tight inventory |
| Illinois | ~5 % | Leads the region |
| Wisconsin | ~4.8 % | Markets like Milwaukee in high demand |
| Nebraska | ~4.75 % | Sustained growth |
| Northeast | Steady increase | Most expensive region per sq. ft., strong supply pressure |
| New Jersey | ~5.6 % | Top-appreciating state |
| Connecticut | ~5.26 % | Markets like Hartford very dynamic |
Among large cities, New York, Chicago, Minneapolis, and some Connecticut and Massachusetts metros stand out. In February–April 2026, prices there hit new records, unlike most major cities where values have fallen from their 2022 peaks.
A few metros considered “winners” in 2026.
| Metro | Price Level / 2026 Trend |
|---|---|
| New York City | ~$704–708k typical value, +4.7 to 4.9 % YoY, new high |
| Chicago | ~$336–340k, +4 to 5 % annual, record high |
| Milwaukee | ~$369k, ~4.8 % increase, 50 % of sales above asking |
| Hartford (CT) | ~$382k, +4.3 % in 2025, +3.9 % expected in 2026, “hottest” market |
| Buffalo | ~$277k, +3.7 % in 2025, +2.5 % forecast |
| Providence | ~$503k, moderate but steady increase, very tight inventory |
These so-called “refuge” markets share several characteristics: prices below the national average (about $384,000 vs. $415,000 nationally for the top 10 in 2026), strong economic fundamentals, and supply that remains 40 to 60 % below pre-pandemic levels. As a result, prices are rising faster than average, even as most public conversation continues to focus on the excesses of the Sun Belt.
Sun Belt: From Sprint to Hangover
Conversely, a large part of the Sun Belt is experiencing in 2026 the direct consequences of the 2020–2022 boom. During those years of massive remote work, households fled expensive Northeast and West Coast metros for Austin, Phoenix, Tampa, Jacksonville, Nashville, and Dallas. Prices skyrocketed at rates of 50 to 60 % in two years. Developers responded to the signal: they built—a lot, sometimes too much.
Consolidated data showing trends since 2019
Sales have seen a significant increase since 2019, driven by heightened demand.
Employment in the sector has grown by 12 % since 2019, reflecting positive momentum.
– Austin saw its average prices double between late 2019 and mid-2022 (from ~$297,000 to $593,000, +100 %).
– Phoenix went from about $293,000 to $470,000 (+60 %) over the same period.
– Miami jumped from $300,000 to $450,000 (+50 %).
– In many Texas markets (Dallas, Houston, San Antonio), gains reached 50–65 %.
In 2026, the bill comes due. The same pattern repeats in several cities: demand remains, but supply has finally caught up, or even surpassed, the migration wave. The result is a gradual shift toward a buyer’s market, with more inventory, longer selling times, and sometimes sharp local price declines.
Sun Belt 2026: Correction, Climate Exposure, and the End of “All Winners”
To understand price trends in the Sun Belt in 2026, three dynamics must be cross-referenced: overinvestment in construction, population movements slowing or redirecting, and the rising importance of climate risk (and insurance) in property valuation.
Overbuilding: When the Pipeline Overflows
A key point: the construction boom launched during the pandemic flooded certain markets with new homes and buildings precisely as rates soared and demand growth slowed.
According to construction data:
– Housing starts fell nearly 8 % year-over-year in the fall, with steeper declines in the South and West.
– Single-family building permits dropped nearly 10 % in the South and over 13 % in the West.
– The number of single-family homes under construction fell 7 % year-over-year, with double-digit declines in the South and West.
– In multifamily, Sun Belt states concentrated about half of the 2.1 million apartments delivered since 2021; their rental inventory grew by about 18 %, compared to 8 % in other regions.
On the ground, this translates into: concrete actions and observable results.
Oversupply of new homes is observed in Austin, San Antonio, Dallas, Phoenix, Tampa, Orlando, and Miami. Developers are offering aggressive promotions including price cuts and rate buydowns of 100 to 200 basis points. Additionally, massive rent concessions are being granted in upscale Class A complexes in Austin, Nashville, Miami, and Phoenix.
BiggerPockets’ Chief Investment Officer, Dave Meyer, sums up the situation bluntly: the determining variable in 2026 is no longer demand, but supply. Austin, he says, “overbuilt,” and that’s why both prices and rents are declining despite still-high demand.
Price Declines Concentrated in Overheated Metros
Market data confirm that the sharpest corrections are in those markets that built the most, rose the most, and remain exposed to climate risks.
For example, in certain major Sun Belt cities:
| City (Sun Belt) | Approx. Annual Price Change (2025–2026) | 2026 Situation |
|---|---|---|
| Austin (TX) | –9 to –24 % from peak, depending on source | Returning to 2019 levels, high inventory |
| Phoenix (AZ) | –5 to –9.5 % since 2022 | Large multifamily wave, exodus to cooler states |
| Tampa (FL) | –0.9 to –2.5 % YoY, up to –10 % forecast | Inventory sharply up, buyer’s market |
| Orlando (FL) | –1.4 % already, further declines expected | Migratory inflow plummeting, inventory swollen |
| Jacksonville (FL) | –1 to –1.5 % | Listings rising, about 5,800 active listings |
| San Antonio (TX) | –4.5 % | Very high rental concessions |
| Nashville (TN) | Slight decline, –4 % expected over 2026 | Inventory sharply up, rates stabilizing |
| Dallas–Fort Worth (TX) | –3.8 to –5.7 % from peak, –4.5 % projected | Correction mainly in east and southeast of metro |
At the broader level of 33 major expensive cities tracked in some indices, 25 already showed price declines from their 2026 peaks. Austin and Oakland hold the records, with drops of about 25–26 % from 2022. New Orleans, another climate-vulnerable market, has lost nearly 19 %.
Florida and Texas: When Insurance Becomes a Second Mortgage
A specific feature of coastal Florida markets and, to a lesser extent, Texas, is the explosion of insurance costs. Research by the First Street Foundation and various insurers shows that the average homeowners premium has risen more than 30 % in a few years, and often much more in high-risk areas.
Homeowners insurance premiums are projected to rise nearly 30 % by 2055 due to full pricing of climate risk, with 18 % to catch up on past underpricing and 11 % for intensifying hazards.
– Premiums rose an average of 33 % between 2020 and 2023 according to a university study.
– A one-standard-deviation increase in catastrophe risk translates to $500 more in premiums per year (versus $300 in 2018).
– In Florida, many homeowners have seen their premiums triple or quadruple in a few years; in some cases, the insurance bill accounts for more than 20 % of the total housing payment, compared to 7–8 % in 2013.
The five metros with the highest projected premium increases are all in high-risk areas:
| Metro | Projected Premium Increase (Long Horizon) |
|---|---|
| Miami | +322 % |
| Jacksonville (FL) | +226 % |
| Tampa (FL) | +213 % |
| New Orleans (LA) | +196 % |
| Sacramento (CA) | +137 % |
Unsurprisingly, home prices in the most exposed areas are beginning to reflect this cost. In Florida:
– Homes in chronic flood zones sell for an average of $75,000 less than comparable properties outside the zone.
– In some parts of the state, homes in high flood-risk areas trade at a discount of 10 to 20 %.
– On Gulf coasts, flood-prone properties see much slower price growth than the national average.
Nearly 60 % of buyers say they want to avoid Florida due to insurance costs and disaster risks
Demographic Adjustment: The Sun Belt Remains Attractive, but Less Obvious
Despite these corrections, the Sun Belt hasn’t lost all its draw. Migration numbers remain impressive: the region now houses more than half of the U.S. population and absorbed about 80 % of recent population growth. Between 2025 and 2026, over 45 million Americans moved, with nearly three-quarters moving to Sun Belt states.
Recent big winners:
| State | Net Population Gain (2020–2022 / 2024–2025) | Strengths |
|---|---|---|
| Florida | +659,000 (2020–2022), +196,980 (2024–2025) | Retirees, remote work, climate (but rising costs) |
| Texas | +417,000 (2020–2022), +391,243 (2024–2025) | Dallas–Houston–Austin triangle, jobs, taxes |
| North Carolina | +287,000 (2020–2022), +145,907 (2024–2025) | Metros like Raleigh and Charlotte |
| Tennessee | +198,000 (2020–2022) | Nashville, Chattanooga, Knoxville |
But the dynamic is shifting: the migration flow to Florida, for example, has dropped from 314,000 people in 2022 to about 64,000 recently, a decline of 80 %. Tampa saw its internal migration balance fall by 70 %, Orlando almost disappeared. In some major Florida cities, outflows now outpace inflows; Miami, in particular, is losing residents in absolute numbers, despite a steady influx of very wealthy households from New York or Boston.
Meanwhile, Midwest and Northeast states—Ohio, Minnesota, Michigan, and cities like Indianapolis, Columbus, Minneapolis—are seeing positive migration balances for the first time in a while, largely thanks to a combination of skilled jobs and more affordable cost of living.
Sun Belt Major Cities vs. “Refuge” Metros: The Affordability Battle
From a buyer’s or investor’s perspective, the contrast is increasingly clear between the overheated Sun Belt markets and the more “sensible” metros of the Midwest and Northeast.
Analysis from Bankrate and other sources highlights the chasm between expensive major metros (coasts and high-end Sun Belt) and more affordable cities. Among the 34 largest markets, only 11 offer at least 30 % of listings affordable to a median household ($80,000 income). In cities like Pittsburgh or St. Louis, about 50 % of listings remain accessible; in Baltimore, Detroit, Cincinnati, or Birmingham (Alabama), it’s about 40 %. Conversely, Miami, Los Angeles, and San Diego flirt with affordability rates below 2 %.
The contrast can be summarized as follows:
| Metro (examples) | % of Listings Affordable for Median Household | 2026 Comment |
|---|---|---|
| Pittsburgh, St. Louis | ~50 % | “Refuge” cities for middle classes |
| Baltimore, Detroit, etc. | ~40 % | Still many buying opportunities |
| Major “expensive” Sun Belt metros (Miami, LA, San Diego) | <2 % | Markets reserved for high incomes |
In the Sun Belt, some secondary markets nevertheless retain a relatively affordable profile and even benefit from renewed interest. Cities like Jacksonville (Florida), Birmingham (Alabama), San Antonio, or certain large Texas cities (Houston, Atlanta) appear on lists of the most buyer-friendly markets in 2026, with prices closer to the national median and a relatively abundant supply of new homes.
The Special Case of Luxury: Deliberate Disconnect
While the “mainstream” market adjusts, the luxury segment follows its own trajectory. Across North America, the median value of top 10 % homes stabilizes around $1.2 million, after a slight correction from the 2023 peak. Sales of ultra-high-end residences (top 1 %, above $5.7 million) remain at remarkable levels, especially in four hubs: Los Angeles, San Francisco/Bay Area, New York, and Chicago.
In 2025, Los Angeles County recorded about 292 transactions over $10 million, totaling nearly $5.4 billion. New York registered nearly 1,400 contracts above $4 million, for a volume of about $12 billion. In these segments, most purchases are made in cash or with low leverage, largely insulating them from the rate constraints affecting the rest of the market.
In the Sun Belt, some places continue to move upscale. Miami has established itself as a major luxury hub, even surpassing New York in late 2025 in the number of active listings over $1 million. But even at this level, differentiation exists: Florida and the Gulf Coast attract wealthy buyers while also embodying some of the most extreme climate and insurance risks.
Public Policy, Local Regulation, and Possible Solutions
Facing these tensions, several public policy approaches are being advanced, but their implementation remains uneven across states and cities.
Ease Zoning, Densify “Intelligently”
Ed Pinto of AEI advocates a relatively pragmatic approach: adjusting lot sizes and easing zoning rules to allow construction of more small starter homes. He estimates that reducing average lot size and square footage can shave 15 to 20 % off the final price, mainly by lowering the land cost.
In this vein, several areas are already moving forward:
Local reforms and federal funds aimed at speeding up construction and reducing homelessness
Several states are working on upzoning, legalizing accessory dwelling units (ADUs), and by-right permitting.
Adoption of a $5+ billion five-year plan to encourage construction via ADUs and conversion of commercial spaces into housing.
$1.5 billion capital investment and new voucher program to combat homelessness.
PRO Housing grants and office-to-residential conversion initiatives provide additional support.
The logic is clear: without multiplying small, affordable units, the gap for middle incomes will remain wide. A recent study estimates that for each unit sold above $680,000, two affordable units would need to be produced to close the affordability deficit for households earning $75,000 to $100,000, whose homeownership success rate has fallen from nearly 49 % in 2019 to just 21 % in 2025.
Sun Belt: Build Less, Correct More
In the Sun Belt, the priority isn’t launching a new wave of construction but absorbing existing inventory. Multifamily starts have already plunged about 75 % from their 2022 peak, and apartments under construction have returned to levels comparable to 2016. Analysts estimate the peak vacancy in overbuilt major markets (Austin, Phoenix, Miami, Nashville) occurs right around 2025–2026, with 12 to 18 more months of “pain” before a return to balance.
According to several experts, multifamily will see a supply turnaround around 2027-2028, with very few deliveries, which could trigger a strong rebound in rents once the excess inventory is absorbed. The year 2026 remains tricky (pressure on cash flows, high concessions, falling values) but could be interesting medium-term in well-located markets, especially Class B segments in areas with strong structural demand.
Social Housing and Aid for the Most Vulnerable: A Policy Blind Spot
Still, the harshest crisis hits the poorest households. The deficit of 7.2 million available and affordable rental units for extremely low-income households cannot be resolved by market forces alone. Low-Income Housing Tax Credits (LIHTC), voucher programs, and targeted subsidies remain under strain, especially as the 2026 federal budget proposes deep cuts to HUD programs.
In this context, some Northeast states are experimenting with more ambitious tools, such as “climate super funds” (funded by the fossil fuel industry to finance resilient infrastructure) or public buyout programs for the most exposed properties (managed retreat). But national coverage remains patchy, and needs are immense.
2026: A Pivotal Year, Neither Crash Nor Euphoria
Overall, the U.S. housing market in 2026 resembles less a bubble bursting than a slowly receding tide. National prices are flat or rising weakly; adjusted for inflation, they are falling. Sales are ticking up slightly—+1.7 to +3 % by year-end depending on the source, for an annual pace of about 4.1 to 4.2 million transactions—but remain well below the 2010s.
Major Sun Belt cities (Austin, Phoenix, Tampa, Orlando, Dallas, Miami, Nashville) are experiencing overbuilding, rising insurance costs, and slowing migration, leading to price corrections or stagnation, longer selling times, and a return of buyer power, but no collapse.
Conversely, Midwest and Northeast metros that had lagged before the pandemic—Cleveland, Milwaukee, Hartford, Buffalo, Rochester, Providence, parts of the New York and Boston suburbs—are discovering a new lease on life. Prices are rising faster than average, but from much more affordable levels. Many Americans are finding a new compromise: a job, a decent urban life, and a home that can still be financed without a lifetime of debt.
The Sun Belt retains its advantages (mild climate, low taxes, dynamic jobs) but indiscriminate investments are no longer winners. Now, climate risk, construction quality, the local job market, urban planning, and demographics are determining factors.
For households, 2026 marks the beginning of a phase where the market ceases to be completely one-sided. Better-prepared buyers with a solid down payment and a good read of local dynamics can once again negotiate, especially in many Sun Belt cities undergoing correction. Sellers, for their part, must relearn to adjust their expectations after years when almost everything sold above asking price. And for public authorities, the urgent need remains to directly attack the heart of the crisis: the shortage of affordable housing, more than price volatility.
The “Great Housing Reset” will be neither spectacular nor fast. But it truly begins in 2026, along a very visible fault line between major cities and the Sun Belt.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
