Did you know that since World War II, home prices in the U.S. have gone up in 91.6% of all years? That’s a powerful trend, and it’s at the heart of the answer to the question I hear most often: Should you buy a home now, or wait for 2026 and hope for better prices?
In the video and narrative below, I walk you through five key housing market metrics: home price history, supply and demand, construction trends, mortgage rate impacts, and local market conditions, to help you make an informed decision. Let’s start by looking at what decades of data really say about home prices and the wisdom of waiting.
The History of Home Prices: What 75+ Years of Data Tells Us
Since 1945, U.S. home prices have increased in about one year out of every twelve. This isn’t just a fluke; it’s a long-term trend that’s shaped the housing market for generations.
If you’re hoping to catch one of those rare down years, history shows you’re more likely to see prices keep rising while you wait.
Picture the scenario: you’re waiting for prices to fall, but the neighborhood you want keeps inching out of reach. That’s not just bad luck, it’s the result of a market that, over the long haul, almost always moves upward. Housing, like every other sector, lives with steady inflation. The idea of waiting for a “correction” sounds smart on paper, but in reality, housing corrections are nothing like what you see in the stock market. Home prices don’t crash and stay down for long. Instead, most dips are brief and tied to major economic shocks, not regular cycles.
A great example is the 2008 financial crisis. That was the worst housing downturn in modern history, and prices did fall, but it took a global meltdown to make it happen. Even then, most markets had recovered and exceeded previous highs within a decade. For those who bought at the absolute bottom, it was mostly luck and timing, rather than a repeatable strategy. Most people who tried to “wait out” the market either missed the window or ended up paying more later.
What about those hoping 2026 will bring another 2008-style crash? The data doesn’t support it. Today’s conditions are very different. We’ll get into supply and demand in a moment, but even the most cautious experts aren’t forecasting major price drops; at most, they expect flat or slightly lower prices, and just as easily, we could see modest gains. Is waiting for a possible one to three percent dip really worth the risk, when the historic odds are stacked against significant declines?
There’s another factor to consider: compound growth. Every 1% annual rise while you wait means paying more later, and rent inflation makes sitting out costlier still. If prices go up 3 to 5% per year, the gap widens quickly, and you’re not just missing one year’s appreciation, you’re resetting your starting point higher every single year. Add in rising rents, and the financial penalty for waiting gets even steeper.
So, if you’re weighing whether to buy now or hold off for a potential “deal,” the numbers suggest that waiting is the riskier move. The long-term track record overwhelmingly favors buyers who act sooner rather than later. But there’s more to the story than just price history. Many believe the market is flooded with homes and that supply is finally catching up with demand. Is that really the case, or is there more going on beneath the surface?
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The Supply and Demand Dynamic: Why the Market is Still Tight
When it comes to what’s really driving home prices right now, the supply and demand dynamic is at the center. Many people think the market is suddenly flooded with homes, but the numbers tell a different story.
Even though listings have increased a bit from the absolute lows of the past few years, inventory is still well below what’s considered normal. We’re still in a low-inventory environment, and that’s a big reason prices remain stubbornly high.
Let’s break down the supply side first. The recent uptick in homes for sale can be misleading. Compared to the near-zero inventory of 2021 and 2022, any increase feels dramatic, but it’s not enough to meet ongoing demand. In many markets, the number of homes for sale hasn’t even come close to historical averages. While buyers may notice a few more options, the reality is that most areas are simply returning to a balanced market.
Now, consider demand. Despite higher interest rates and economic uncertainty, demand for homes holds steady. Millennials, now the largest adult generation, are hitting their prime home-buying years. Add to that first-time buyers and people relocating for remote work, and you have a steady stream of motivated buyers. Even as rates have climbed, many buyers have adjusted their expectations, maybe shifting their target from a $400,000 home to a $350,000 home, but they’re still in the market, keeping competition alive.
Picture a bakery that stops producing bread. Over time, buyers will have an increased need for bread, but no longer need to visit the bakery. That’s today’s housing market: pent-up demand is growing for an affordable product that builders have stopped producing.
Even with a few more homes available, the number of buyers still outnumbers what’s on the market. As soon as new inventory hits, one in three is snapped up quickly, especially in popular neighborhoods or price ranges. The imbalance between buyers and available homes keeps the pressure on prices, making it tough for buyers to find bargains.
To put this in perspective, a balanced housing market typically has four to six months of inventory. That means it would take four to six months to sell all the homes currently listed at the current sales pace. Currently, most markets are at just over four months. This is a clear signal that sellers still have a strong position, and prices are unlikely to see significant declines until that changes.
Higher mortgage rates have definitely changed the landscape, but they haven’t erased demand. Instead, they’ve shifted it. Some buyers are waiting, but many remain active, albeit at different price points or with adjusted expectations. The overall appetite for homeownership hasn’t disappeared; it’s just evolving.
So, despite headlines about rising listings or shifting demand, the fundamental imbalance remains. The supply is still too low, and demand is keeping pace with it. As long as that’s the case, prices will stay elevated, and buyers hoping for a sudden flood of affordable options may be waiting a long time.
But inventory is only part of the picture. The real story is how we got here in the first place, and why the shortage of homes, especially affordable ones, is so severe.
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Why We’re Facing a 15 Million Starter Home Shortage
Since 2010, the U.S. has underbuilt starter homes by an estimated 15 to 19 million units, a staggering shortfall that sits at the root of today’s affordability crisis.
This isn’t just a statistic; it’s a reality shaping the choices and frustrations of buyers across the country. The shortage isn’t simply about more people looking to buy, but about years of new construction failing to keep up, especially when it comes to homes that first-time buyers and middle-income families can realistically afford.
Let’s look at how we got here. Before the last major housing crash, builders produced a balanced mix of starter, mid-range, and luxury homes. But after 2008, the landscape changed. Builders began to pull back from constructing entry-level homes, focusing instead on higher-priced properties. The Dodd-Frank Act, introduced in the wake of the financial crisis, played a significant role by tightening mortgage qualification standards. While this helped curb risky lending, it also made it harder for many would-be buyers to qualify for loans on lower-priced homes. Builders, seeing tighter margins and a smaller pool of eligible buyers, shifted their focus to homes with higher profit potential.
Think of it like a car factory that stops making affordable sedans and only produces high-end SUVs and sports cars. The families that need practical, entry-level vehicles are left searching with fewer and fewer options. That’s what’s happened in the housing market: the supply of affordable homes has dried up, while new construction has targeted wealthier buyers.
Housing market analyst Kevin Erdmann has studied this issue closely. Using household formation data, he calculates a 15–19 million unit shortfall of entry-level homes. This gap isn’t a temporary blip; it’s the result of nearly two decades of underbuilding at the lower end of the market. As new households form, recent graduates moving out, growing families, and retirees downsizing, the demand for affordable homes keeps rising, but the available inventory just can’t keep pace.
This shortage has ripple effects throughout the market. When there aren’t enough starter homes, buyers are pushed up into higher price brackets, intensifying competition for mid-priced properties. Many who would have bought entry-level homes are forced to rent for longer, which increases demand and prices in the rental market as well. The end result is that affordability continues to slip further out of reach for a growing segment of Americans.
Solving a 15-million-unit deficit isn’t something that can be accomplished quickly.
Building at that scale takes years of sustained effort, policy change, and significant investment. The backlog of unmet demand means prices are likely to remain elevated, especially in fast-growing regions. With builder costs significantly higher today, there should be no expectation that builders can produce less expensive homes. This is not a problem that will resolve itself soon, which is why waiting for a sudden influx of affordable homes is unlikely to pay off for most buyers.
But what happens when mortgage rates climb? We’ll tackle that next.
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When you examine the numbers, buying now aligns with what decades of history have shown: waiting almost always leads to higher prices. Housing trends follow a consistent upward path, driven by supply and demand, as well as years of underbuilding.
History is clear: higher mortgage rates do not push home prices down. In each of the ten rate-hike periods shown in this table, home values kept climbing. The data simply do not back the notion that rising mortgage rates stall price growth.
And remember, real estate is local.
My Tallahassee market comparison proves that local trends can differ from national headlines, so it’s essential to analyze your area as well as the big picture.
Real estate is a long-term investment, not a short-term bet like you might find in the stock market. History shows that waiting usually costs more, so if you plan to stay long-term, buying now and refinancing later is a better option than trying to time the market. If your expected tenure is short, renting will likely be the safer option.
Did you know that many real estate analysts use partial information to create scary headlines in the hopes of earning your click? Watch my latest video, to learn about 5 Statistics that are Manipulated to Fool You,” and learn how to spot cherry-picked data, dodge clickbait headlines, and separate fact from fiction in every housing-market report.
