Existing home sales are stuck near a three-decade low, just over 4 million a year. Back in 2021, that number was 6.1 million. Fewer sales are just one part of the current housing market landscape.
The Harvard Joint Center for Housing Studies’ annual State of the Nation’s Housing report tracks everything from home sales and household formation to construction, affordability, rental burdens, and the policies being introduced to address the country’s housing challenges.
Findings from the 2026 report should come as no surprise to real estate agents:
- High housing costs and economic uncertainty are keeping would-be buyers and renters on the sidelines.
- Household growth is slowing.
- Existing-home sales remain depressed.
- New construction has relieved some supply pressure, but it hasn’t produced the lower-cost housing households need most.
So while the 2026 report is far from an optimistic forecast, this data can help you reset seller expectations, show buyers where they may have negotiating leverage, identify local affordability resources, and spot opportunities created by zoning and housing-policy changes.
It also gives you credible numbers you can use during listing presentations, client conversations, market updates, emails, and social content.
We’ve grouped the report’s 10 takeaways by theme to support five specific conversations, so you have the context and the data to present these realities to local buyers and sellers, either face-to-face or in your marketing content.
Home Sales and Household Growth Are Both Losing Steam
The first thematic grouping covers takeaways 1-3: activity is sluggish, demand is weakening, and the economic backdrop explains why.
First, existing-home sales aren’t the only sign of a slowdown. New-home sales held flat too.
The same pullback appears on the rental side:
- Rental retention rates rose as renters stayed in place rather than moving.
- New occupancies dropped as fewer people signed new leases.
Builders pulled back to match, with construction starts down 1%, driven by a 7% drop in single-family starts.
Household formation is cooling too, on both the owner and renter side:
- Household growth slowed for the third year in a row in 2025
- New homeowner household growth fell by half, and the homeownership rate dropped for the second year running
- Renter growth in the first quarter of 2026 was less than half what it was a year earlier
The reasons trace back to jobs and confidence. Employment growth fell from 1.5 million in 2024 to just 116,000 in 2025. Consumer confidence dropped more than 20 points over 2025, then fell further after the conflict in Iran began, hitting an all-time low in April 2026
People without steady jobs or confidence in their income don’t form new households or make big purchases like a home.
Fewer buyers and slower sales change how you set expectations for today’s buyers and sellers.
Here are a few talking points for buyers who assume they’re still walking into a bidding war:
- “Sellers are more flexible than they’ve been in years. If the right home came up this week, would you want to be in a position to move on it, or are you still figuring out the plan?”
- “Honestly, this might be the best negotiating environment buyers have seen in three or four years. The ones who know how to use it are going to win. Want me to walk you through what that looks like?”
And for sellers expecting their home to fly off the market at the pace of two years ago:
- “Before we pick a number, can I walk you through what the active buyer pool actually looks like right now? Because the strategy that worked two years ago is a different strategy than what works today.”
- “The buyers are still out there. There are just fewer of them right now, which means the ones who show up are more selective. Pricing to where the market is, not where it was, is what gets you in front of them. Does that make sense?”
This is just one area where the AI Script Advisor shines, which is why it’s essential to our three-part sales system in BAMx. Sign up here for instant access.
High Costs Keep Buyers and Renters on the Sidelines
Takeaway #4 covers the cost side, where high prices and high rates are pricing out buyers and renters alike.
The cost of buying a home is sitting near record highs:
- Median new and existing home prices have both crossed $400,000
- Existing home prices are up 54% since 2020, pushing the median home to about 5 times median income, versus a ratio of 3 in the 1990s
- Monthly cost on a median-priced home hit $3,100 in the fourth quarter of 2025, up from $1,700 in early 2020
- Affording that payment now takes an income above $120,000, up from $66,000 in 2020
These numbers are impacting real potential buyer clients in your neighborhood. A client’s sense of what they can afford, if it’s based on 2020 numbers, needs a reset before they start touring homes.
On the seller side, a listing price that looks reasonable on paper can sit unsold if it falls outside what buyers can qualify for.
New Supply Is Easing Some Shortages, Not All of Them
Takeaways #5, #6, and #7 cover supply, and how uneven the growth has been.
Vacancy rates have climbed off historic lows:
- Rental vacancy rate: up from 5.9% in 2022 to 7.3% in the first quarter of 2026, close to the 1990s average of 7.7%
- For-sale vacancy rate: up from 0.81% in 2023 to 1.13%, close to the 1990s average of 1.6%
The fuller picture of housing supply depends on where you are:
- Austin, where construction has run hot: apartment vacancy up 5 percentage points since 2021, for-sale listings nearly tripled
- Chicago, where construction has stayed more modest: apartment vacancy up only half a point, for-sale listings down 20%
This split has fueled a real debate over whether a national housing shortage still exists at all. Ivy Zelman clarified her position in a recent conversation about the market.
“Our view is that the market is balanced and that there is not a shortage…”
Zelman’s statement came up on last week’s Knowledge Brokers Podcast with special guest RealScout CEO Andrew Flachner.
BAM included a clip from that KBP conversation in a recent Instagram post:
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Here’s what Flachner said:
“I spend my days with agents and teams and brokerages, and from what I hear from them, there is no U.S. housing market. There are hundreds of markets, and right now, they disagree with each other, in more than one spot. What I’d say now is that the shortage was real, but it was never evenly distributed across the country. And we spent years treating the Northeast problem and the Sunbelt problem as the same problem. And they really never were.”
Lisa Chinatti added, “we have a shortage of the right type of housing,” which is something a lot of would-be buyers are feeling right now.
Flachner’s point remains: the conversation you’re having about this depends on where you are (as it always has).
In fast-building markets like Austin, you need to prepare sellers for real competition: more inventory means buyers have options, and pricing and presentation carry more weight than they did two years ago.
In tighter markets like Chicago, buyers need something different: a national headline about rising vacancy doesn’t mean much if it isn’t happening on their own street. Local numbers win this argument every time.
Lower-cost housing tells a different story on vacancy numbers:
- Rental stock growth over the past 10 years has gone almost entirely to higher-rent units.
- Units renting for less than $1,000 a month (roughly the ceiling for a household earning $40,000) have fallen by 7 million.
- Listings affordable to households earning $75,000 or less were down 60% in March 2026 compared with March 2019
According to the National Low Income Housing Coalition’s Gap report, 11 million extremely low-income renters compete for 3.8 million units they can afford and find available, leaving 7.2 million of them without an affordable option.
Which brings us back to Chinatti’s point: the shortage is with affordable housing, not so much housing in general (at least in terms of national supply).
And that’s true for both low-income renters and would-be homebuyers.
Cost Burdens Hit Lower-Income Renters the Hardest
Takeaways #8 and #9 cover the toll on lower-income households, from rising cost burdens to less money left over for everything else.
Renter cost burdens hit a record high in 2024:
- Among renters earning under $30,000 a year, 83% spend more than 30% of their income on housing
- 66% of that same group spend more than half their income on housing
- Renters earning $30,000 to $44,999 face a 72% cost-burden rate, up almost 4 points since 2019
- Renters earning $45,000 to $74,999 face a 49% cost-burden rate, up more than 9 points since 2019
Both middle-income groups now sit more than 15 points above where they stood in 2001.
Residual income tells the same story from a different angle:
- For renters earning under $30,000, residual income, what’s left after paying for housing, fell to a record low of $210 a month in 2024
- In 2019, adjusted for inflation, that same figure was $410
Low-income homeowners face record burden rates too, on top of rising insurance, property taxes, and utility costs.
For clients trying to move from renting to owning on a tight budget, the affordability conversation has to include what’s left over after the mortgage, not just the mortgage payment itself.
Knowing the local down payment assistance and affordable housing programs well enough to make a real referral counts as part of the job now.
States Are Moving Faster on Supply Fixes
Takeaway #10 covers the policy response, with states moving faster than Washington to boost supply.
A growing number of state and local governments are cutting regulatory barriers and rolling out financial tools like revolving construction loans. In 2025 alone, several states made moves:
- Arkansas and Iowa now allow accessory dwelling units in single-family zones
- Kentucky allows new manufactured homes in single-family zones
- Florida, New Hampshire, and Texas allow multifamily housing in commercial zones
- Tennessee established objective criteria for project approvals
- Colorado, New Hampshire, and Montana now permit single stairwells in midrise buildings
Federal action has moved too, with an increase in Low-Income Housing Tax Credit funding and the 21st Century ROAD to Housing Act. The report’s own conclusion is that more support is needed given how deep the need runs this year.
For agents, an ADU rule change or a rezoning can open up a listing angle or an investment opportunity a client hasn’t considered.
Knowing the local zoning changes before a client asks about them is a fast way to look like the informed advisor in the room.
This is where an AI agent like the one Houston Realtor Katie Day has set up can be a huge assist and timesaver. She created one to monitor city council websites for agenda items that matter to local residents.
The top three sources to tap for news on local zoning changes would be these:
- Local planning/zoning department website and meeting agendas (via Legistar or Granicus alerts)
- City council and planning commission meeting agendas, where rezonings get voted on
- Local Realtor association government affairs updates
You can also set up a Google alert for “[city] rezoning” or “[city] zoning ordinance,” or monitor your state legislature’s website for news on housing committee bills and statewide reforms like ADU rules.
What Agents Should Take From a Cooling, Costlier Market
The shortage story now depends on where a client is standing. Austin and Chicago are headed in opposite directions, and a national number won’t tell either buyer or seller what’s happening on their own street.
Affordability is the harder conversation to have with buyers this year, given how much income it now takes to qualify for a median-priced home.
Keep an eye on state policy changes too, since they will decide where the next listing or investment opportunity comes from.
Bring local numbers and a clear read on what a client can afford into every conversation, and you’ll stand out in a market like this.
