Waiting for the Housing Market to Crash? You May Be Waiting a Very Long Time

For years, prospective homebuyers have been told the same thing:

“Don’t buy now. The housing market is about to crash.”

The reason changes depending on who is making the prediction.

Sometimes it is mortgage rates. Sometimes it is foreclosures, inflation, politics, war, an upcoming recession or a scary-looking chart making the rounds on social media.

But the conclusion is almost always the same:

Just wait. Homes will be cheaper soon.

The problem is that some buyers have been waiting for that “soon” since 2020.

Meanwhile, home prices have continued climbing, mortgage rates have remained elevated and the monthly payment on the same house has become considerably more expensive.

That does not mean everyone should rush out and purchase a home tomorrow. It does mean buyers and sellers should be careful about putting their lives on hold while waiting for a dramatic market event that the current data simply does not support.

So, is the housing market actually about to crash?

Let’s look at what is really happening.

Home Prices Are Still Rising

The latest June housing data showed that single-family home prices increased approximately 0.3% from May and were about 3% higher than they were in June 2025.

The national median price for all existing home types reached approximately $440,600, an increase of 1.8% compared with the previous year.

Those numbers are not spectacular.

They are also not the beginning of a housing crash.

The market is no longer experiencing the frantic price growth of 2020 and 2021, when homes regularly received multiple offers within hours and buyers were waiving nearly every protection imaginable.

Today’s market is slower, more selective and far less forgiving of overpriced homes.

But nationally, prices are still moving upward.

Not quickly. Not evenly. But upward.

Why Haven’t Prices Collapsed?

A major housing crash generally requires one essential ingredient:

Far more homes for sale than there are buyers willing and able to purchase them.

That is not what we have.

There are currently around 1.56 million homes for sale, representing approximately 4.6 months of available inventory. That level is nearly unchanged from one year earlier.

In other words, the country has not experienced the enormous wave of listings that would typically be needed to force prices substantially lower.

Buyers may have more negotiating power than they did during the pandemic, but sellers are not standing in a nationwide line of desperation.

There are more choices.

There is more time to think.

There may be room to negotiate.

But there is not a flood of unwanted homes overwhelming the market.

The Foreclosure Headlines Sound Scarier Than the Numbers

You may have seen headlines announcing that foreclosure filings have increased by approximately 21%.

That sounds dramatic—and technically, it is a meaningful percentage increase.

But percentages without context can paint a misleading picture, especially when the increase begins from a relatively low starting point.

During the first half of 2026, there were approximately 227,548 foreclosure filings.

During the same six-month period in 2010, there were approximately 1.65 million.

That is not a small difference.

The foreclosure crisis surrounding the Great Recession involved a massive volume of distressed properties entering the market. Banks were overloaded with repossessed homes, homeowners owed more than their properties were worth and risky lending practices had left millions of borrowers vulnerable.

Today’s market has challenges, but it is not currently producing anything close to that level of distress.

Foreclosures may continue rising from unusually low levels. Certain cities and homeowners may experience real financial pressure.

But an increase in foreclosures does not automatically mean millions of discounted properties are about to hit the market.

So far, that simply is not happening.

“Why Don’t We Just Build More Homes?”

It sounds simple.

If housing is too expensive, build more housing.

The problem is that builders face many of the same economic pressures affecting everyone else.

Land is expensive. Labor is expensive. Materials are expensive. Financing is expensive. Permitting can take months or years, and zoning rules often restrict what can be built and where.

Housing construction has also remained relatively stable during the past several years and is down significantly from pandemic-era activity, meaning the country is not suddenly producing a massive wave of new inventory.

Builders must create homes that buyers can afford while still earning enough money to justify the project.

That is becoming increasingly difficult.

New construction is helping in some areas, particularly where builders can offer incentives or mortgage-rate buydowns. However, the country is not building enough affordable housing to overwhelm demand.

There is also a difference between a home being “started” and a home being available for someone to move into.

Construction takes time.

Even as new homes are added, existing homes are lost every year to fires, storms, deterioration, demolition and redevelopment.

The idea that builders are about to create a giant surplus of inexpensive homes sounds appealing.

The numbers do not currently suggest that is coming.

Mortgage Rates Are the Real Affordability Problem

Home prices are only part of the affordability equation.

For many buyers, the bigger issue is the mortgage rate.

The average interest rate on a 30-year fixed mortgage has recently been around 6.6%.

That is dramatically higher than the approximately 3% rates available during the pandemic-era market.

Consider a $400,000 mortgage.

At 3%, the principal and interest payment would be approximately $1,686 per month.

At 6.6%, the payment would be approximately $2,554 per month.

That is a difference of roughly $868 every month, before adding property taxes, homeowners insurance, mortgage insurance or homeowners association fees.

That is why buyers feel like home prices have increased far more than the official appreciation numbers show.

The house may only be a few percentage points more expensive than it was last year, but the monthly cost can feel completely different when interest rates are elevated.

Mortgage Rates Are Probably Not Returning to 3% Anytime Soon

This is where buyers need to be realistic.

There is currently no meaningful data suggesting mortgage rates are heading back to 3% in the next several years.

Even rates below 4% would likely require extraordinary economic circumstances, a severe recession, aggressive government intervention or another crisis that drives long-term bond yields dramatically lower.

The 3% mortgage was not normal.

It was the result of an unusual combination of pandemic-era economic disruption, massive monetary stimulus, Federal Reserve bond purchases and historically low Treasury yields.

During parts of 2021 and early 2022, the yield on the 10-year Treasury was below 2%, helping make 3% mortgage rates possible.

Those conditions are no longer present.

Could mortgage rates eventually decline from current levels? Certainly.

Could we see periods where rates move into the upper 5% range under favorable conditions? That is possible.

But buyers should be extremely cautious about basing a multiyear housing decision on the expectation that 3% or 4% mortgages are coming back.

There is currently no strong evidence pointing in that direction.

Waiting for 3% rates could be like waiting for 2019 grocery prices or 2020 vehicle prices.

They existed once, but that does not mean the market is required to return to them.

Why Mortgage Rates Move

Mortgage rates are closely connected to the yield on the 10-year U.S. Treasury note.

The Federal Reserve influences financial conditions, but it does not simply announce what the average mortgage rate will be.

The historical relationship between the 10-year Treasury yield and the average 30-year mortgage rate is strong because mortgage investors expect to receive a premium for taking on more risk than they would by purchasing government debt.

A homeowner could default.

A Treasury security is backed by the federal government.

That additional risk creates a premium.

When Treasury yields rise, mortgage rates generally rise.

When Treasury yields fall, mortgage rates often follow.

Inflation expectations also matter.

An investor is unlikely to happily lend money at 3% for decades if inflation is expected to run at 4%, 5% or 6%. The return would lose purchasing power over time.

Rising energy prices can increase inflation expectations, which may push Treasury yields and mortgage rates higher. When energy prices and inflation expectations ease, rates may move in the opposite direction.

That is why energy prices, government spending, economic growth, geopolitical conflict and inflation reports can all influence mortgage rates.

The rate on your future home loan can move because of events happening thousands of miles away.

Welcome to the housing market.

The Problem With Waiting for the “Perfect” Market

The perfect market usually becomes obvious only after it is over.

Buyers say they are waiting for prices to fall.

But if prices begin falling because unemployment is surging and the economy is deteriorating, those same buyers may become afraid to purchase.

Buyers say they are waiting for mortgage rates to fall.

But if rates decline, more buyers may reenter the market, increasing competition and potentially pushing prices higher.

Sellers say they are waiting for prices to increase.

But if they are selling one home to purchase another, the home they want may also become more expensive.

There is always something to wait for.

The real question is whether waiting will improve your position.

Suppose a buyer delays a purchase for two years hoping mortgage rates fall by 1%.

During that time, the home they want may appreciate, rent continues to be paid, insurance costs may rise and competition could return as rates improve.

Even if the mortgage rate eventually falls, the overall purchase may not become cheaper.

Real estate decisions rarely come down to one number.

Buyers May Have More Leverage Than They Realize

One advantage of the current market is that buyers can often make more thoughtful decisions than they could a few years ago.

Depending on the local market, buyers may be able to negotiate the purchase price, request repairs, ask for closing-cost assistance, obtain a seller-paid rate buydown and keep important inspection protections.

That opportunity could shrink if mortgage rates fall enough to bring large numbers of buyers back into the market.

Lower rates sound wonderful, but they rarely arrive in isolation.

They often bring more competition.

A buyer purchasing today may pay a higher interest rate but negotiate a better price or better terms. If rates later fall meaningfully, refinancing may become an option.

A buyer who waits may receive a lower rate but pay more for the house and compete against several other offers.

Neither scenario is automatically better.

But waiting is not risk-free.

Sellers Cannot Assume Every Home Will Sell Easily

The current market is not a repeat of 2021.

Buyers are more cautious, monthly payments are higher and homes are being compared much more carefully.

A well-priced, well-presented home in a desirable location can still perform extremely well.

An overpriced home with deferred maintenance may sit.

The first few weeks on the market matter. Buyers notice price reductions, long market times and listings that appear to be chasing the market downward.

Sellers need to understand what comparable homes are actually selling for—not what a neighbor listed for, what an automated website estimates or what someone hopes the property is worth.

Pricing correctly does not mean giving the home away.

It means creating enough interest to put the seller in the strongest possible negotiating position.

So, Should You Buy or Sell Now?

There is no universal answer.

Buying makes sense when the home fits your needs, the payment is comfortable, your finances are stable and you expect to own the property long enough to absorb normal market fluctuations.

Selling makes sense when the move supports your lifestyle, financial goals or future plans.

What usually does not make sense is delaying an otherwise reasonable decision solely because someone online promised that a dramatic crash or a 3% mortgage is right around the corner.

We know what the market looks like today.

We know approximately what homes are selling for.

We know what current mortgage rates are.

We know how much inventory is available.

We know what buyers are negotiating and how sellers are responding.

What we do not know is what inflation, interest rates, politics, energy prices or the broader economy will look like two years from now.

Making a decision using known information is often more practical than gambling on an unknown future.

That does not mean rushing into a decision.

It means evaluating the opportunity in front of you rather than waiting for a perfect market that may never arrive.

The Bottom Line

The housing market is not easy.

Affordability remains a serious problem. Mortgage rates are high. Buyers are frustrated, and sellers cannot count on receiving a dozen offers simply because they put a sign in the yard.

But difficult does not necessarily mean collapsing.

Home prices are still rising modestly.

Inventory remains limited and has not meaningfully increased from the previous year.

Foreclosures are nowhere near Great Recession levels.

Builders are not creating an overwhelming surplus of homes.

Mortgage rates have remained largely within the 6% to 8% range during the past four years, and the source transcript anticipates rates remaining around the 6% to 7% range absent a major change in geopolitical conditions or monetary policy.

Most importantly, there is no reliable evidence suggesting that 3%—or even sub-4%—mortgage rates are returning in the next few years.

Could the market change? Of course.

It always does.

But waiting for a housing crash or historically low mortgage rates is not a strategy.

It is a prediction.

For buyers and sellers who are already on the fence, the better question may not be:

“What will the market do next?”

It may be:

“Does making a move make sense for me under the conditions we understand today?”

Because the future will always be uncertain.

The market in front of us is the only one we can actually make decisions in.