Key facts
- Meredith Whitney predicts the US housing slowdown will continue for at least another year.
- She does not foresee a 2008-style correction in home prices.
- High mortgage rates and home prices are cited as reasons for the prolonged slowdown.
- 2026 is projected to be the weakest year for home sales since 2011.
- Tight housing supply, homeowners holding low mortgage rates, and baby boomers aging in place contribute to the lack of price decline.
- HELOC volume was $291 billion in the week ending September 23.
Meredith Whitney, a forecaster known as the 'Oracle of Wall Street' and recognized for her predictions during 'The Big Short,' anticipates that the US housing market will continue to experience a prolonged slowdown. She believes that high mortgage rates and elevated home prices will prevent significant improvement in sales activity for at least the next year.
Whitney forecasts that 2026 will be the weakest year for home sales since 2011, with 2027 expected to be similarly challenging. Despite a sharp drop in sales and waning buyer demand, she stated that a correction in home prices on the scale of 2008 is unlikely because the fundamental dynamic of supply and demand has not shifted sufficiently.
"To see home prices coming down dramatically, you'd have to see more supply than demand, and that dynamic just doesn't exist," Whitney said.
The housing market has been in a slump for years, with potential buyers deterred by soaring home prices and surging mortgage rates. The average 30-year fixed mortgage rate has exceeded 7.5%, and the S&P Cotality Case-Shiller US National Home Price Index has appreciated 59% since the start of 2020.
Several factors contribute to Whitney's outlook:
- Tight Supply: While some areas with pandemic-era overbuilding may see price drops, overall supply remains constrained, particularly in regions like the northeast. The total housing supply deficit is estimated to have grown to over 4 million homes by the end of 2025.
- Homeowner Hesitancy: Many homeowners are reluctant to sell and finance a new purchase at current high rates. A Realtor.com analysis indicated that around 78% of borrowers had mortgage rates below 5%-6% at the start of 2026.
- Aging in Place: A significant portion of older Americans, who hold substantial home equity, are opting to age in their current homes rather than downsize, further limiting inventory. A 2024 Freddie Mac survey found 68% of boomer homeowners are likely to stay in their current houses.
- Home Equity Loans: Whitney pointed to rising Home Equity Line of Credit (HELOC) volumes as an indicator that people are staying put and investing in their current homes. HELOC volume reached $291 billion in the week ending September 23, a 13% increase over the past five years, according to Fed data.
Despite these headwinds, the market has shown some signs of shifting in favor of buyers recently, with sellers increasingly offering price cuts and concessions. In August, 45% of home sales involved seller concessions, and 16% included both concessions and price cuts.