Don’t hold your breath for the “Goldilocks effect.” These key indicators indicate that the real estate market continues to be in turmoil.
Anyone holding out hope that 2026 will be a breakout year for the U.S. real estate market should be ready to check their intuition.
Participate in the INMAN Intel Index Survey
Mike Simonsen, chief economist at Compass, previously predicted home sales would increase 4% this year from a year ago. And any uptick would be welcome news for real estate professionals, given that sales activity has been depressed for nearly four years.
But so far, the market has lagged behind expectations, and there are no signs that the situation will improve.
mike simonsen
“Overall it’s been a little disappointing,” Simonsen said of the market so far this year.
Late last year, Simonsen told Inman that he tracks three key data points that help determine the overall health of the market. Simonsen provided an update on these metrics in an interview this week.
Adoption rate
This measure of the labor market looks at how employers add people to their payrolls. It is therefore an indicator of the broader economy, indicating whether consumers sell in one market and buy in another.
That’s why Simonsen said he looks to the employment rate as an indicator of whether Americans are getting new jobs and therefore are likely to buy, sell, or both.
“The situation is worse than we expected,” Simonsen said. “That means things like relocation for new jobs, and fewer new jobs. As an indicator of what’s going to boost the housing market, this year has been weaker than I would have expected.”
New listing
Simonsen said another indicator of the potential for increased activity is new home listing data.
This result was also “lighter than expected this year.”
“This is one of the factors that actually leads to inventory tightness,” Simonsen said. “Overall, inventory is currently only 4% more homes for sale than it was a year ago.”
Last year, this figure was up 30% year-on-year, indicating that inventory growth will slow this year and “could turn negative,” Simonsen said.
“One of the things I was looking for at the beginning of the year was that as new listings started to accelerate, more homes would come onto the market,” he added. “That would have led to even more price pressure. But we don’t see any of that happening.”
Fluctuations in mortgage rates are also impacting the market, with buyers expecting inventory to increase as interest rates fall, but sellers holding back.
pending home sales
Simonsen had expected home sales to increase 4% this year, unless the stars aligned, interest rates fell, the economy boomed and there was a significant increase in sales in the market.
That’s not happening, he said. And like other economists, he is lowering his expectations for this year’s sales activity.
“We expected year-over-year home sales growth to be 4%, but it’s actually closer to 2%,” Simonsen said. “Performance has been very poor in that regard, but it has grown except for a big two-week storm in late January and early February when half the country was shut down.”
The Iran war and its impact on interest rates and inflation also suppressed sales activity.
“Overall, we’re only up a few percentage points from last year in terms of weekly holds,” Simonsen said. “That said, the last week has been pretty strong, so we’ll take a look next week and see if we can get a set.”
Email Taylor Anderson
