New: 🧠 Market Minds Issue #118

We appreciate each and every one of you for taking the time to read Market Minds. Buckle up and enjoy the free value, and you won’t want to miss… how a “small” 1% difference looks completely different when the number in front of it has eight digits.

The market is exhaling.

Inventory ticked up again last week to 690,547 homes, up 8.24% year over year . A year ago, that growth rate was north of 30%. The surge phase is over. What’s left is a controlled release.

New listings rebounded to 54,324, still well below the 80,000–100,000 weekly cadence that defined healthy pre-2020 springs . Sellers are returning, but not stampeding. This is normalization, not expansion.

You should read that carefully. Supply is improving, but we’re not rebuilding negotiating leverage at scale. We’re inching toward balance, not abundance.

The real story isn’t the level of inventory. It’s the pace. An 8% annual growth rate doesn’t create pricing pressure. It creates friction. Enough homes to give buyers options. Not enough to force capitulation.

Roughly 32% of homes are taking a price cut before selling, down slightly from 33% this time last year. On paper, that looks like improvement.

In practice, one-third of the market is still negotiating with itself.

Mortgage rates are hovering near 6%. Demand hasn’t collapsed at this level, it has stabilized. Weekly pending sales came in at 59,469, almost flat with last year . Total pending sales for 2026 have shown year-over-year growth each week before weather distortions .

That’s not a boom. It’s a floor.

Buyers have accepted 6% as a working reality, but they haven’t accepted aspirational pricing. The psychology has shifted. They’ll transact, but only at numbers that make sense relative to income and alternatives.

The market is clearing. It’s just clearing selectively.

Some of the volatility in January was weather-driven. Snowstorms suppressed activity. Weekly data is now “normalizing,” according to HousingWire’s tracker .

The important word there is normalizing.

Normalization isn’t acceleration. It’s gravity returning.

Spring inventory builds typically begin in late February or early March . The question now is simple: does supply rise faster than demand can absorb it?

If listings accelerate beyond seasonal norms, price cuts will widen again. If sellers remain measured, pricing finds support.

This spring won’t be driven by rates. It will be driven by behavior.

For much of the past two years, sentiment has swung wildly crash calls on one side, “shortage forever” on the other.

The data now looks… boring. And that’s powerful.

• Inventory up modestly
• Price cuts slightly lower year over year
• Rates steady near the lower end of their range
• Pending sales roughly flat

That’s a market searching for equilibrium.

When inventory growth slows from 33% to 8%, upward price pressure isn’t intensifying but downward pressure isn’t either. You’re looking at a market that has digested the rate shock.

The era of forced repricing appears behind us. What replaces it is a thinner margin for error.

Watch three things over the next 60 days:

The spring market isn’t a launchpad. It’s an audit.

You’re entering a phase where execution matters more than macro. Pricing precision, property selection, micro-market intelligence. The broad strokes have faded.

Inventory is no longer the story. Behavior is.

And behavior, as always, determines who captures the spread.

January existing home sales fell 8.4% to a 3.91 million annualized pace, down 4.4% year over year . On the surface, that’s a market slipping backward. In reality, you’re looking at December’s hesitation closing in January’s cold.

Buyers didn’t just face snowstorms. They faced rate volatility. When buyers don’t trust the direction of mortgage rates, they don’t transact. December pending sales weakened, and January closings reflected that lag. Real estate runs on confidence, not temperature.

The key question isn’t whether January was weak. It’s whether the weakness was cyclical weather or structural demand erosion. The data suggests the former.

Unsold inventory dipped 0.8% month over month to 1.22 million homes, representing 3.7 months of supply . Despite the modest monthly decline, inventory is up 3.4% from a year ago.

That’s not a buyer’s market. It’s not even neutral. Four to six months is balance. At 3.7, supply remains constrained enough to prevent price deterioration at scale.

Translation: transactions are soft, but pricing power hasn’t broken. Until supply pushes materially above five months, don’t expect meaningful downward pressure nationally. The volume story and the price story are diverging.

Median price rose 0.9% year over year to $396,800, marking 31 consecutive months of annual increases . That’s resilience bordering on defiance.

Why? Owners are sitting on equity cushions built during the 2020–2022 surge. Since January 2020, the typical homeowner has accumulated roughly $130,500 in housing wealth . That wealth acts like shock absorbers. It reduces distress selling and blunts forced inventory.

This is not 2008. Leverage is lower, underwriting was tighter, and homeowners are not underwater. When volume slows in a low-leverage system, prices don’t collapse. They stall.

The Housing Affordability Index climbed to 116.5, up from 111.6 in December and 102.0 a year ago. This marks seven consecutive months of improvement.

That improvement stems from wage growth outpacing price gains and mortgage rates running below year-ago levels. Affordability is now at its best level since March 2022.

Here’s what matters: affordability usually turns before sales volume does. Demand doesn’t reappear the moment metrics improve. It reappears when buyers believe the improvement will stick. Stability, not just lower rates, is the trigger.

If rates stabilize into spring, you could see demand uncoil quickly. The market has been compressed, not destroyed.

The Northeast posted a 5.9% month-over-month increase in sales, while the Midwest, South, and West all declined . Year over year, every region fell, with the West down the most at 7.9% .

Markets that saw the largest pandemic-era runups are correcting through volume first. The West’s deeper decline reflects prior excess appreciation and greater rate sensitivity. Meanwhile, markets with tighter inventory and slower appreciation are proving stickier.

The Southeast and Southwest, where inventory has climbed, are positioned for higher transaction velocity this spring. Markets starved of listings will continue to feel artificially frozen.

There is no “national” market anymore. There are liquidity pockets.

Median days on market rose to 46 days from 39 last month . That’s normalization, not distress. Properties are taking longer, but they are still clearing.

Cash transactions slipped to 27%, and the share of investors/second-home buyers fell to 16% . Speculative heat is cooling.

Meanwhile, first-time buyers ticked up to 31% . That’s subtle but meaningful. When first-timers re-enter while investors retreat, it suggests end-user demand is stabilizing. That’s healthier long term than a cash-driven frenzy.

January is rarely predictive. But the setup into spring matters.

If inventory rises meaningfully while affordability continues to improve, transaction volume can rebound without price destruction. If rates resume volatility, buyers will stay parked, and 2026 will be defined by stagnation rather than contraction.

Right now, this is a supply-constrained, equity-rich market experiencing a confidence pause. That is fundamentally different from a balance-sheet crisis.

The opportunity this year won’t be broad-based appreciation. It will be velocity in the right zip codes when confidence returns. The buyers are there. They’re just waiting for permission.

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You’ve lived through the euphoria. Now you’re living through the hangover.

The median home price rose 1.1% year over year in January, landing at $422,921 . Ten straight months under 2% growth. That’s not resilience. That’s gravity reasserting itself after a decade of stimulus, scarcity, and speculative oxygen.

This is what happens when prices sprint too far ahead of incomes for too long. Demand doesn’t collapse overnight. It erodes. Quietly. Relentlessly. And once buyers believe time is on their side, appreciation becomes optional.

You’re not in a crash. You’re in a market that’s remembering math.

The typical home sold for 2.1% below its final list price, the biggest January discount since 2023 . Only 20.8% of homes sold above asking the lowest January share since 2020 . Homes are taking 66 days to go under contract, the slowest January pace in a decade .

Power has shifted. Not dramatically. Decisively.

When sellers still outnumber buyers but both are retreating, the leverage doesn’t disappear, it concentrates. The buyer who shows up is serious. The seller who stays listed is motivated. That gap is where margin lives now.

Speed used to be your ally. Today, patience is.

Wages climbed 3.7% year over year in January . Home prices grew 1.1% . The average 30-year fixed mortgage rate fell to 6.1%, the lowest level since 2022 .

On paper, that’s the beginning of a reset. Income growth is finally outpacing home-price growth. Purchasing power is stabilizing. The math is healing.

But psychology lags math.

Pending home sales fell to their lowest level since 2023 . Existing-home sales dropped 3.6% month over month — the largest decline since 2022 . Nearly 40,000 purchases were canceled in January, 13.7% of contracts, the highest January share on record .

Buyers don’t just need better numbers. They need conviction. And conviction hasn’t returned.

Active listings fell 1.3% month over month, the largest drop since mid-2023 . New listings ticked up slightly from December but remain down year over year .

Sellers are pulling back because buyers are pulling back. It’s reflexive.

But here’s the nuance: even with that pullback, supply still exceeds demand enough to slow price growth and extend days on market . Months of supply sits at 4.3 . That’s not distressed. It’s balanced, tilting.

This isn’t a flood of inventory. It’s a thinning of urgency.

National averages are anesthetic. The story is local.

Milwaukee (+10.8%), Philadelphia (+10%), and Cleveland (+8.4%) are posting real price growth . Meanwhile, San Jose (-5.6%), Portland (-3.6%), and Fort Lauderdale (-2.7%) are contracting .

Pending sales are collapsing in San Francisco (-21.5%) and Oakland (-21.3%) , while West Palm Beach is still eking out growth (+8.2%) .

The frothiest pandemic winners are digesting excess. The steady, affordability-driven Midwest markets are absorbing demand.

Capital is no longer chasing narrative. It’s chasing cash flow and relative value.

You’re watching the market relearn discipline.

For a decade, appreciation masked operational mediocrity. Speed forgave pricing mistakes. Cheap money covered underwriting sins.

Now?

Time on market matters. Pricing precision matters. Financing structure matters. Market selection matters more than ever.

Price growth at 1% is not a crisis. It’s a filter. It separates those who relied on momentum from those who understand fundamentals.

And fundamentals are back in charge.

The fever broke. The patient survived. Now comes physical therapy.

This 2026 waterfront double-lot compound at 258 Atlantic Blvd in Key Largo, FL just hit the market at $25,000,000. Six beds, eight baths, two gigantic houses, a 65-foot dock, solar panels, metal roofs and a price per square foot that quietly tells a much bigger story.

Because at this level… does 1% even matter?

Check it out👇

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Discipline is the new leverage.

Sellers are pulling back because buyers are pulling back, even as months of supply sits at 4.3 and price growth hovers near 1%.

Instead of chasing spring momentum or forcing volume, participants are withholding supply and accepting slower velocity, preserving pricing power in a market relearning math.

In a market searching for equilibrium, restraint is control.

America isn’t crashing — it’s recalibrating. Housing volume is soft but equity is strong, which means this isn’t 2008, it’s a confidence freeze waiting for rate stability. The broader housing market is shifting from momentum to math — buyers are negotiating again, price growth has stalled to 1%, and patience is the new power. Meanwhile, in media and tech, the real disruption isn’t AI hype — it’s structural capital shifts and behavioral change: private markets hoard upside before IPOs ever reach the public, Netflix wins by playing long-term chess while others chase narratives, and GLP-1 drugs may quietly rewire the consumer economy more than any chatbot ever could. Translation: leverage is migrating — from sellers to buyers, from public investors to private capital, from calorie sellers to pharmaceutical innovators. The fever broke across multiple sectors. The survivors aren’t the loudest. They’re the most disciplined.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team

The content of Market Minds is provided for informational purposes only and reflects personal opinions based on sources believed to be reliable. It does not constitute financial, investment, legal, or professional advice. Each reader is solely responsible for their own decisions.