Texas and Florida Just Sent a HUGE Warning to the Housing Market

Added: 2026-05-27

[00:00:00]Home prices are now doing something they were not supposed to do. After years of being told the housing market was poised to make a comeback on lower interest rates, the data shows something else entirely. First of all, S&P K Schiller, their index just declined for the second straight month. Not one noisy month, but two in a row. Plus, that took the year-over-year change to its lowest level in several years. But even going farther than that, the government's own price data. It didn't just confirm S&P K Schiller. What it showed was the lowest year-over-year change in 14 years going all the way back to the bottom of the last big housing bust. Different methodology, different sample, different construction, same conclusion. Home price growth is slowing and slowing fast. And in more markets, home prices are not just slowing, they're actually in real trouble. And the weakness is being led by exactly the places you'd expect at this stage of the cycle. Texas and Florida. These were among the hottest pandemic era housing markets. They had the migration boom, the investment boom, the construction boom, short-term rental boom, the everybody is moving here boom.

[00:01:09]You got Austin, Dallas, San Antonio, Tampa, Orlando, Jacksonville, Cape Coral, Northport, parts of South Florida. These markets were treated as if demand was limitless. And it might have been had the economy actually been strong and resilient. Now builders are discounting. Sellers are cutting prices.

[00:01:27]Insurance costs are crushing affordability, particularly in Florida.

[00:01:30]Property taxes and carrying costs are biting in Texas along with that former price appreciation.

[00:01:37]Investors are stepping away. And any buyers who are left, they're facing a deteriorating labor situation, jobs, incomes, crushing insurance costs, as I mentioned, affordability issues that are all wrapped up into the same labor market dynamic, plus falling consumer confidence. We got more evidence of that earlier today as well. Consumer confidence is down, jobs, incomes, the housing market. It's not really about interest rates. It's about a hell of a lot more than that. And that was before we even got to the energy shock. That's the biggest thing about housing right now. It tells us, it tells us in no uncertain terms that consumers are not just being pessimistic for the sake of pessimism. They are acting on those impulses and acting in bigger and bigger ways. So, let's start with Case Schiller. The S&P Core Logic Case Schiller index is one of the most widely followed home price measures in the country because it looks at repeat sales. In other words, it's not just comparing whatever mix of homes happen to sell this month versus last month.

[00:02:37]It's trying to track price changes for the same homes over time. And that makes it useful for spotting turning points.

[00:02:44]And the latest turning point is pretty obvious. The 20 city index has now declined for two consecutive months on a seasonally adjusted basis. The national average was basically zero in February before also falling in March, which is the latest data that just came out. And that matters because housing usually has a seasonal pattern. Prices tend to firm up in the spring and summer when activity is stronger and then soften later in the year. So when prices are falling even after seasonal adjustments, it means the weakness is not just normal calendar noise. It means the market is softening underneath the surface. And the year-over-year rate is even more important. K. Schiller's annual growth rate slowed to the weakest reading in several years going back to 2023. And this time it's not about rising interest rates. Now, that does not mean every city is down year-over-year. It doesn't mean every homeowner is underwater. It means the rate of appreciation that defined the post-pandemic housing bubble is gone. That's a major macro change.

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[00:04:41]I highly recommend booking a call with them today to see if they're the right fit for you. We thank Monetary Metals for their sponsorship. But now, let's get back to the rest of our video. For a long time, the housing market had two conflicting forces. On the one side, affordability, the word everybody uses, was historically bad. Mortgage payments were too high. Prices got to be too high. Insurance, taxes, and maintenance way too high. Buyers were just they just got to be exhausted. But on the other side, inventory was extremely low.

[00:05:11]Homeowners with 3% mortgages refused to sell. That kept supply tight and tight supply kept prices from falling as much as affordability suggested that they should. Now, existing homeowners who waited for this spring rebound this year are finding out that the buyer pool is not what it used to be. That's how you get two monthly declines in a row for Case Schiller. And the important point is not that the national index is suddenly collapsing because it's not.

[00:05:36]The important point is that the direction has changed and the annual growth rate is now at a multi-year low.

[00:05:41]So the housing, it's a slowmoving market. It usually doesn't fall apart all at once. First you see sales that freeze up and inventory begins to build.

[00:05:50]Then sellers resist reality, but then they have to price they have to cut prices and then indexes begin to slow and then the weakest local markets go negative and eventually the national numbers will follow. And I've been showing you the past year under flat beverage. We are well into that sequence now to the point that housing prices were falling before we even get to the real energy shock. And the FHFA price index is telling us the same exact story from a slightly if not materially different angle. It's constructed differently than K Schiller, which is a positive here. FHFA is based on mortgages backed by Fanny and Freddy.

[00:06:28]So, it doesn't capture the entire housing market in the same way. It excludes some jumbo loans and cash transactions. It has a different geographic and price tier mix. But that's exactly what makes it so useful.

[00:06:40]When Case Schiller and FHFA are both saying home price growth has slowed to multi-year lows, you can't dismiss it as a quirk of one index or another. You can't say it's just luxury markets or just cash buyers or one metropolitan area or just one methodology. Both indexes are pointing in the same direction. FHFA shows home price appreciation really losing steam. The monthly numbers have weakened and the year-over-year rate has just flopped, coming in at 1.71% for the month of March. That doesn't sound bad, but in fact, it's the worst for the index since March of 2012, back when the country was just then starting to crawl out of the worst housing crisis. Again, this is not the same as saying every market is crashing in 2026. The Northeast and parts of the Midwest remain relatively stable because those regions didn't quite overbuild to the same degree. And inventory in many of those places is still somewhat tight.

[00:07:35]But the national average is being pulled lower by the markets where the pandemic boom went the farthest. And that means Texas and Florida. And this is exactly how housing cycles work. The most speculative markets lead on the way up and they also lead on the way down. The buyer who moved from California or New York in 2021 is not the marginal buyer any longer. The marginal buyer in 2026 is a household looking at a mortgage rate that's still too high for them, a home price that's still way too high, an insurance quote that may be shocking in a labor market that no longer feels as secure after not producing nearly enough income the entire time. That buyer is no longer chasing houses. The buyer is waiting. Flat beverage is forcing them to. Now, one key point here, the housing market is not healed because home prices have stopped growing. After prices soared ahead by 50%, and both indexes show that they did during the bubble period, they soar ahead by 50%. Coming in flat doesn't mean it magically fixes affordability. Even if it was down a couple percentage point, that doesn't magically fix affordability. What it tells us is something more specific about macroeconomic conditions. So, when you hear that home price growth has slowed to a multi-year low, don't confuse that with relief. For buyers, the problem is still affordability, which means incomes. Housing did indeed prices did indeed soar by 50%. And ownership costs in some areas outpaced even that. Jobs just never came close to matching either of those, pricing more and more Americans right out of the marketplace. And with flat beverage now showing up, many possible home buyers who might have been on the fence were shoved right back on the wrong side of it and out of the housing market for the foreseeable future. Now, for sellers, the problem is expectations.

[00:09:23]They still remember 21 and 22. They remember bidding wars. They remember waved inspections. They remember homes that were selling in a weekend and buyers offering well over asking prices.

[00:09:34]But that market is gone. It's long gone.

[00:09:36]Now buyers are asking for concessions.

[00:09:38]They're comparing listings. They're waiting for price cuts. They're choosing new construction if the builder gives them a better deal. They're walking away if the inspection is bad. They're doing what buyers normally do when they regain leverage. And that transition is painful because housing is emotional. Sellers don't cut prices quickly. They usually resist. They delist. They wait. They blame the season. They blame the Fed.

[00:10:00]They blame the election. They blame the media. But eventually, if they do need to sell, price becomes the adjustment mechanism. And that's what the indexes, both of them are beginning to show. So now let's connect this to consumers where it really belongs. The conference board's May 2026 report on consumer confidence came out and showed yet again that consumer confidence slipped on the same concerns that have been building for more than just the energy shock. The energy shock in many ways just amplified everyone's fears. Don't have enough jobs, don't have enough incomes. Now prices are rising for a necessity like gasoline. And it leaves everyone facing worse and worse conditions. Consumers are plainly worried about growth and what happens when it costs more to fill up at the pump. That means households are getting squeezed from both sides. On the one, they're less confident about the economy, jobs, and future income.

[00:10:52]But on the other, they're still dealing with high prices for especially gasoline. And that's exactly the environment where big ticket spending gets delayed. Buying a house is the ultimate big ticket decision. It requires confidence and job security.

[00:11:07]You got to have savings and access to credit. It requires belief that the future will be stable enough to take on a 30-year obligation. And the conference board's expectations measures are especially important because they capture they capture how consumers feel about the next six months. If households expect business conditions or job availability to weaken even further, they're going to be even less likely to make major financial commitments. that shows up first in discretionary categories. Fewer restaurant visits, fewer vacations, fewer home improvement projects, fewer appliances, fewer cars, more trading down, more private label and comparison shopping, using promotions, more people saying, "Well, we're going to wait." And then it shows up in housing. If consumers are cutting back nights out because of gasoline, they sure as hell aren't going to be signing up for a new house and a new mortgage at a payment they can barely afford or even think they can barely afford before we even get to the latest rise in energy prices. We're getting even more reports about what it means in this $4, $5 gas economy and how it's impacting behavior. Fewer nights out, more belt tightening. And that phrase matters because gasoline has a unique psychological effect. People see the price constantly. They pass it on the road. They feel it every time they go to the station. It's one of the few prices that can change consumer behavior and do so almost immediately. When gas moves higher, lower and middle inome households don't have the luxury of ignoring it. They have to adjust. They combine errands. They drive less. They cancel trips and eat out less. They trade down at the grocery store. We're seeing that in tons of places. They delay purchases. They look for cheaper options and use credit cards more carefully. in some cases more desperately. And this is happening after several years of cumulative problems already. You've got the price increases from 5 years ago that impoverished everybody and then a job market that's been falling off in particular since 2024.

[00:13:01]That's the part many analysts still miss. Consumers are not reacting to one month of higher gasoline prices in isolation. the reacting of years of higher grocery bills, rent, higher insurance and car payments, credit card rates, and depleted pandemic savings.

[00:13:17]So, if wages are still growing on paper, which they are, the lived experience is different because it applies to fewer and fewer. And it's never enough to keep up with past price changes, let alone those that are still coming down the road. This is why Walmart can be strong while the consumer is weak. Higher income households trading down to Walmart is not a sign of abundance. It's a sign of value seeeking behavior that's moving up the income ladder. This is why Kroger, as we went over last week, is talking about price investments and how much those matter to the company, meaning they can cut costs for their customers. Grocery stores don't cut their prices out of charity. They do it because customers are pushing back. And this is why Lowe's, when they called the housing market the most difficult since the financial crisis, it's why it matters. It backs up what we're seeing in the home home price data. Home improvement is about confidence and confidence over spending. People remodel when they feel good about their income and their home equity. They delay when they don't. That's why McDonald's is cutting prices by going back into its value. It's why people stop buying appliances. It's why used cars start to suffer in travel. Travel plans get cancelled at the very least change. It's why the housing market, the biggest of big ticket items, starts to turn and turn more and more ugly. Now, here's where housing becomes difficult and maybe even dangerous for the broader economy. When home prices rise, households feel wealthier. It's called the wealth effect. They borrow more confidently. They spend and remodel.

[00:14:44]They move, buy furniture, appliances.

[00:14:47]They hire contractors. Housing creates a sizable spending ecosystem around it.

[00:14:52]Just ask Lowe's and Home Depot. When home prices slow or fall, that process reverses. Homeowners become more cautious. Buyers wait, sellers cut, builders discount, mortgage lenders get lower volumes, though that's probably a good thing right now. I mean, furniture stores weaken, appliance makers end up sounding a lot like whirlpools went over not long ago. That's the housing feedback loop, and it's already visible.

[00:15:15]Existing home sales, they've been stuck at heavily depressed levels for years.

[00:15:19]No one is buying despite what had been falling market interest rates. Mortgage purchase applications remain weak.

[00:15:25]Builders are using incentives to protect volume. Price cuts are more common in inventory heavy markets and delinquencies, they're not falling any longer. Foreclosures are up. Consumer confidence, as we already went over, is in the toilet with big ticket categories under growing pressure. Now, the price indexes are catching down to that reality. For a long time, the argument was, yes, sales are bad, but prices are still holding up. Price gains are still holding up. That argument was already getting flat beveraged and is now getting energy shocked. Prices are not holding up the same way anymore. They're slowing nationally, falling month-to-month in case Schiller, and just plain worrisome. According to FHFA, the weakest markets are no longer isolated outliers. They're the biggest states, the most important markets. And like Texas and Florida led on the way up, they're now leading on the way back down. So, what should we watch from here? Well, first of all, watch inventory. If active listings keep rising in Texas and Florida, prices are going to stay under pressure. But if we keep seeing more D-listings, that's not a good sign either. Second, builder incentives. Builders are often faster to adjust than existing homeowners. If buy downs and discounts get bigger, that tells you the market's getting weaker than the headline price suggests. Third, big ones, insurance and taxes, especially in Florida. The all-in monthly payment matters more than the listing price. On the macro side, obviously start with the labor data, and I don't mean the monthly headline payroll figure. Housing can't afford more widespread unemployment.

[00:16:57]Increasingly uncertain consumers who delay on big tickets. They're more than enough to keep up the pressure. Consumer confidence, another key matter. We'll see how all of this fits together in the year-over-year price indexes moving forward. Monthly declines can be noisy, but if the annual growth rates keep moving lower, that confirms and really further confirms the slowdown is becoming more durable. And that just goes back and tells us that jobs and income woes that we're seeing in all the labor market data aren't just consumers complaining to surveyors. They are indeed altering their behavior at the margins at the biggest of big ticket items. That's where all of this stuff really comes together. If the housing market continues to turn like this and continues to turn lower, it is as much a key critical macroeconomic signal. The housing market is not saying everything's going to crash tomorrow, but is absolutely sending a slowdown signal in some markets. It's a falling price signal. K Schiller has now declined for two months in a row. FHFA confirms home price growth is weakening.

[00:17:57]Both indexes have year-over-year rates at multi-year lows. And for FHFA, worst since 2012.

[00:18:04]Texas and Florida, they're leading the weakness because they had the biggest boom, the most supply response, the most investor activity, and some of the worst affordability pressures. At the same time, the consumer backdrop continues to deteriorate. The Conference Board's May 2026 confidence update showed confidence is easing as incomes and house finance fears continue to mount. Households are trading down. They're cutting back.

[00:18:27]They're delaying big ticket purchases and becoming even more cautious.

[00:18:32]This is not an environment where the housing market suddenly rebounds no matter what happens with interest rates.

[00:18:37]This is an environment where sellers have to meet the market. And the market right now is sending us a very clear signal. The pandemic era boom is over.

[00:18:46]But what that means for the macroeconomy is even more important.

[00:18:52]Now, retail giant Lowe's went even further in confirming what we're talking about here, as did some of the other retailers like Kroger and Walmart, and they're all in the video link below. As always, thank you very much for joining me. Huge thank you University members and subscribers. And until next time, take care.