The US residential market, once thought to be insulated in the Northeast and Midwest, is now feeling the same pressure that hit Texas and Florida earlier. Dave Meyer chief investment officer at BiggerPockets warns that the correction that began a few years ago is likely to intensify rather than reverse. High mortgage rates have squeezed affordability, pushing many prospective buyers out of the market and prompting sellers to offer larger concessions or cut asking prices.
On the surface, headline numbers such as the median home price reported by Zillow still show a modest increase—about 1.5% month-over-month and a 38-month streak of growth. Yet those figures mask a deeper story: when inflation is stripped out, real home prices are actually declining. The Case-Shiller index, adjusted for inflation, indicates that values sit roughly 4.8% below their 2022 peak, a drop that the Calculated Risk Blog rounds to an approximate 5% decline.
Demand is eroding while sellers scramble for buyers
One of the most tangible signs of weakening demand is the surge in seller concessions. According to recent Redfin data, about 45% of listed homes now include a concession—whether a rate buydown, cash back at closing, or a repair credit. This is up from roughly 42% a year ago and is especially pronounced in markets like Atlanta (73% of listings), Nashville (76%), Charlotte (68%), and Phoenix (67%). When a buyer receives a concession, the effective purchase price can be several percent lower than the listed figure, meaning the nominal 1.5% rise in median prices may be illusory.
Concessions are not limited to resale homes. In the new-construction segment, about two-thirds of transactions now feature seller incentives, and roughly 40% of builders have cut list prices by an average of 6%. Builders typically prefer incentives to price cuts because a reduction hurts the comps for their entire development. The fact that they are resorting to price cuts signals heightened distress across the supply chain.
Real-price decline outpaces inflation, reshaping affordability
Even though nominal values appear stable, the inflation-adjusted picture tells a different story. A home that appreciated 1.5% over the past year may still be losing purchasing power if 5% during the same period. In real terms, that represents a negative return of about 2%, which is the hallmark of a genuine correction rather than a temporary dip. Over the four years since the 2022 peak, the cumulative real-price loss averages roughly 1.25% per year, a pace that aligns with historic post-boom adjustments but is far from a market crash.
The widening gap between headline and real prices is evident in the trend line: early 2026 the inflation-adjusted shortfall was around 2.5% of the peak, climbing to 3.7%, then 4.1%, 4.4%, and now 4.8%. This steady drift suggests that the correction is deepening, and if historical patterns hold, a seven-year or longer adjustment period is possible. Investors leveraging properties may feel a slight cushion, but cash buyers and those counting on appreciation should reassess expectations.
What the mixed data means for buyers and investors
For prospective purchasers, the current environment offers opportunities—provided they adjust for concessions and real-price trends. In markets where concessions exceed 60%, a prudent buyer might discount the listed price by 2-3% before factoring in the incentive. In contrast, low-concession markets such as San Jose (4%) or New York (6%) still reflect relatively firm pricing, and buyers there should be prepared for smaller or no incentives.
Investors should focus on the underlying fundamentals rather than headline price moves. Properties that can generate cash flow or that are positioned in regions with modest concession rates may retain value better than speculative flip projects dependent on rapid appreciation. Monitoring the Case-Shiller real-price index and the frequency of concessions—both in resale and new-build sectors—will provide the clearest signal of whether the correction stabilizes or continues to steepen.
