Housing Market Set for Stagnation in 2026, Despite Trump’s Interventions
The U.S. Housing market is poised for a year of flat price growth in 2026, according to JPMorgan Global Research. This comes despite efforts by President Trump to improve affordability, which analysts believe will have a limited impact.
Supply and Demand Balancing Act
JPMorgan’s year-ahead forecast, published January 27, predicts a 0% price growth rate for 2026, a significant slowdown from the near-doubling of prices over the past decade. This stall is expected as a slight increase in demand neutralizes a concurrent rise in housing supply.
A key factor supporting demand is the anticipated dip in adjustable-rate mortgages as the Federal Reserve potentially lowers borrowing costs later this year. Homebuilders are continuing to offer rate buydowns to attract buyers and clear existing inventory.
John Sim, head of securitized products research at JPMorgan, noted that these factors “could be enough, along with a rising wealth effect, to shift demand higher although supply increases subside.”
Regional Disparities: West Coast and Sun Belt Lagging
While the overall market is expected to remain flat, regional variations are emerging. Areas that experienced a construction boom during the pandemic are now seeing price declines. The West Coast and Sun Belt are currently experiencing the quickest price drops.
Specifically, Texas home prices are down 2.4% year-over-year, and Florida home prices have fallen by 5.1%, according to Zillow data.
The Housing Shortfall and Overbuilding Concerns
Despite regional declines, JPMorgan estimates a nationwide housing shortfall of approximately 1.2 million homes. However, this figure is lower than the consensus view, as supply has been increasing in recent months. The bank also points out that over the past 30 years, housing completions have generally kept pace with household formation.
“Overbuilding is a sure path to home price declines, and builders have been navigating an increasing supply of latest homes,” Sim added.
Trump Administration’s Efforts: Limited Impact Expected
President Trump has proposed measures to address housing affordability, including a ban on institutional investors purchasing single-family homes. However, JPMorgan believes this ban will be largely ineffective, as institutional investors represent only 1-3% of the market. Many of these investors are involved in building rental properties, and a ban could potentially reduce overall supply.
Another initiative involves directing Freddie Mac and Fannie Mae to purchase up to $200 billion in mortgage-backed securities to lower mortgage rates. JPMorgan notes that this represents just 1.4% of the $14.5 trillion mortgage market and is unlikely to significantly reduce borrowing costs – potentially only by 10-15 basis points.
many homebuilders are already offering rate buydowns of 100 to 200 basis points, diminishing the impact of any modest market rate reduction.
Trump’s Preference for Higher Home Values
President Trump has explicitly stated his preference for rising home prices, acknowledging that homeowners have benefited from recent appreciation. He expressed concern that making homeownership too simple and cheap could lead to a decline in values.
“I don’t wish to drive housing prices down. I want to drive housing prices up for people that own their homes,” Trump said during a Cabinet meeting on January 29.
Frequently Asked Questions
What is JPMorgan’s outlook for home prices in 2026?
JPMorgan Global Research forecasts 0% growth in U.S. Home prices for 2026.
Will President Trump’s policies impact housing affordability?
JPMorgan analysts believe President Trump’s proposed policies will have a limited impact on housing affordability.
Which regions are experiencing the biggest declines in home prices?
The West Coast and Sun Belt are currently seeing the most significant price drops.
Is there a housing shortage in the U.S.?
JPMorgan estimates a shortfall of approximately 1.2 million homes nationwide.
Pro Tip: Keep a close eye on regional market trends, as national averages can mask significant local variations.
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