The year ahead in the housing market is likely to be more about stabilization than acceleration, according to insights shared during Zonda’s Q1 Housing Market Forecast by chief economist Ali Wolf and principal of advisory Bryan Glasshagel.
While the new-home market has had a muted start to the year, market fundamentals suggest housing is working through a recalibration rather than entering a downturn.
At the national level, 2026 is expected to be “more of the same” year, with starts and sales tracking closely with 2025 levels. Data from Zonda’s January New Home Market Update (NHMU) indicate new-home sales slid on a month-over-month and year-over-year basis to start 2026 while housing affordability began to show signs of improvement. Interest rates have trended down toward 6% while quick move-in (QMI) inventory per community has continued to improve as builders have successfully sold through standing stock.
“It remains difficult to make a uniform statement about the housing market today,” said Wolf. “We are seeing a stark divergence where in some metros, traffic and sales are exceeding seasonal norms, while in others, qualified shoppers remain scarce and every transaction feels like a slog.”
During the webinar, Wolf highlighted how uncertainty around the labor market, federal policy shifts, geopolitical tensions, and affordability pressures are continuing to create hesitation among consumers despite interest in purchasing homes.
“If we want to understand where housing is headed, we have to go back to the consumer,” Wolf shared. “Right now, confidence just isn’t fully there.”
The result of consumer hesitance in January was a decline in new-home sales. Zonda’s new-home sales metric indicated there were 713,104 new homes sold in January on a seasonally adjusted annualized basis, down 7.2% from a year ago. The Zonda New Home Pending Sales Index (PSI), which accounts for fluctuations in supply by combining total sales volume and the average sales rate per month per community, registered a reading of 123.1 in January, an 8.8% decline from the same month last year.
While affordability has improved due to lower mortgage rates and price adjustments, incentives continue to do a lot of the heavy lifting converting traffic into sales for builders. Approximately 20% of builders surveyed by Zonda in January lowered prices on a month-over-month basis. At the same time, 60% of new-home communities offered incentives on to-be-built homes and 78% on quick move-in supply.
The Zonda Market Ranking (ZMR), which accounts for both sales pace and volume, indicates an “average” market nationally compared to historical performance. Among Zonda’s top 50 major markets, 26% percent of highlighted markets were “overperforming” and 36% were “underperforming.”
While incentives are still required to help convert traffic, Wolf said builders are showing discipline with regards to their starts pace in 2026. Housing starts are down year over year which is helping prevent against a major buildup of unsold finished inventory. This is reflected in part by the improvement in QMI inventory in January. National QMIs totaled 33,034 in January, down 1.1% compared to January 2025 and down 8.8% compared to December 2025. There were 2.1 QMIs per community national in January, a metric that has trended down for four consecutive months.
To help unlock the housing market and move from a “more of the same” environment to one of true growth, Wolf says stability is needed. Consumers need confidence, affordability, and compelling life-stage reasons to move. While demographic drivers are in place, confidence remains the limiting factor for the market.
“The next few weeks will be important to watch to see how much traction the spring selling season truly has,” said Wolf.
Texas Market Focus
During the Q1 Housing Market Forecast webinar, Glasshagel delivered a regional analysis of the four major markets in Texas: Dallas, Houston, Austin, and San Antonio. The four markets rank among the top five new-home markets in terms of volume, with high levels of production builder activity. However, the markets are experiencing some of the same moderation that has occurred nationally.
Employment gains have slowed from the rapid pace of 2022 and 2023, particularly in high-income sectors that support home buying demand, though migration remains a Texas tailwind due to corporate relocations and household inflows. However, near-term buyer hesitation has introduced some volatility to the markets.
“It still feels choppy day to day, but we’re seeing glimmers of hope,” Glasshagel shared. “There’s cautious optimism forming–something we didn’t see much of late last year.”
Base prices across the Texas markets have remained largely flat year over year and land prices have stayed relatively firm. Incentives remain costly, though, and slower absorption rates have increased carrying costs for builders, Glasshagel said.
Several Texas markets are operating above traditional equilibrium thresholds for vacant developed lots. While this reflects land pipelines established during stronger demand cycles, it also represents future flexibility in the state.
“We’re not building into a slowdown, and that’s good news,” Glasshagel said.
The perspective in both Texas and nationally is a slower housing market characterized by confidence-driven holding patterns, elevated incentive levels, and disciplined builder approaches. As a result, the industry appears positioned to respond when stability returns to the market.
Some insights in this article were taken from Zonda’s quarterly Housing Market Forecast webinar.
