2026 Housing Market Outlook: Key Takeaways from John Burns Research Conference
No Quick Fix in 2026!
1. “Higher for Longer” – and Not Just Mortgage Rates
The consensus from Torsten Sløk and Mark Zandi was that inflation will be sticky at 3% for at least the next 18 months – keeping long term rates elevated
Powell’s upcoming exit could accelerate additional Fed nominations, potentially raising questions about long-term independence and adding volatility to bond markets
Consumer confidence is at a 12-year low; the lack of job growth and H1-B visa availability pose a greater challenge for homebuilders than current mortgage rates
2. Immigration and Demographic Shifts are Happening in Real Time
Household formation remains renter-driven, underscoring persistent affordability challenges and the growing appeal of rental units
Expect population movement in 2026 from high-cost to lower-cost markets, as affordability and lifestyle priorities continue to redefine growth regions
While slower immigration presents a structural challenge, it also reinforces the need for more efficient labor utilization
3. Rate Buydowns: The New “Affordability Drug”
Builders’ rate buydowns have become a go-to sales lever – and something buyers have been taught to expect – even when buydowns aren’t required to qualify
A decline in mortgage rates decreases consumers’ debt-to-income ratio, expanding access to loans and home purchases, but also potentially resulting in negative equity the day after closing when buyers face true market pricing
Consumer confidence, affordability, and inventory remain headwinds, but builders continue to demonstrate creativity and adaptability in driving absorption
4. Rentals: “No quick fix in ‘26” – Andy Capps
The rental market remains oversupplied, and as a result, expect flat to slightly negative rent growth, soft renewals, and ongoing concessions through next year
Developers require 6.5+% yields for new starts as institutional build-to-rent (BTR) continues to gain traction
The Midwest continues to be a bright spot with steady rent growth, balanced supply, and compelling relative value compared to many Sunbelt markets
5. Big Builders Have Strengthened, M&A Remains Robust, and Capital is Available
There’s no shortage of buyers – U.S. publics, Japanese housing companies, and select private equity groups remain active – but execution and leadership quality remain the differentiators
Global growth is slowing, and M&A is increasingly used to supplement organic expansion
Capital is still a solution looking for a problem, as many well-capitalized builders are recycling their own cash flow versus taking on new partners, with some, but not many, private builders experiencing distress
Land bankers are taking more risk, and could be creating tomorrow’s opportunity
