Robert Dietz, chief economist for the National Association of Home Builders, spoke at the International Builders Show in Orlando, where he stated his expectation that home prices will decline in many cities this year. He expects home prices to fluctuate as a result of the resale market adjusting to price competition.
Resale prices are anticipated to go down to improve affordability conditions.
Dietz noted, “So we think that’s happening in 2026 and of course, it’s needed, because when we look at the home price to income ratio. This, to me, sums up the affordability challenge.”
New listing prices cut in half
Home sellers have offered newly built homes at 15% less than in fall of 2022, as a result of a weaker market and to combat affordability. Statistics have shown that the average home price is 4.9 times higher than a regular income.
Despite new builds observing a price cut, previously owned homes are less likely to offer a price reduction.
In the fourth quarter, 19.3% of listings for new builds offered price reductions, compared with 18% of existing homes, according to the Quarterly New-Construction Insights report. The median new-home sales price has been lower than preexisting homes since April 2025.
New construction homes have smaller sizes, with a 5% reduction in floor plans. The 3-to-1 ratio was the typical home price-to-income rule of thumb, but the ratio 5-to-1 makes it more difficult for younger households to accumulate savings.
Prices are expected to increase before there is a decline
Danielle Hale, chief economist at Realtor.com, expects to see home prices rise in 2026 before there is a decline. Sale prices for the housing market were higher in the Northeast and Midwest.
Hale said, “sellers are pricing right upfront and trying to avoid having to make asking price reductions as they move to 2026.” Falling prices are viewed in the South and West, whereas rising prices are in the Midwest and Northeast.
