Homesellers Dwarf Homebuyers: Home Prices At Risk

Published on February 25, 2026

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The housing market is experiencing a widening imbalance between homesellers and homebuyers, with listings rising faster than demand. This is contrary to the post-pandemic period of extremely tight inventory and strong demand. Homeowners with ultra-low mortgage rates who were initially hesitant to sell are now increasingly selling. As shown below, the housing market is shifting away from the homeowner-dominated conditions of the pandemic era toward one where supply is growing but qualified and willing buyers remain scarce. Rising inventory signals that pricing power is slowly shifting from homesellers to homebuyers.

More sellers than buyers does not necessarily imply a sharp decline in home prices, but it does change market dynamics. As we are starting to see, homes are staying on the market longer, price reductions are more common, and bidding wars are fading. Importantly, the imbalance reflects affordability constraints due to high prices and financing costs. Thus, demand is constrained despite decent employment prospects and stable household balance sheets. As shown by the red rectangles, periods with more homesellers than buyers were associated with a decline in the growth rate of home prices. Conversely, the green rectangle shows what happens when the number of homebuyers is much larger than the number of home sellers. Bottom line: expect home price growth to slow and possibly decline until there is a better balance between buyers and sellers. Please see the Tweet of the Day for more on the topic.

Homesellers Dwarf Homebuyers: Home Prices At Risk

What To Watch Today

Earnings

Economy

Market Trading Update

Yesterday, we discussed the substantial short interest in the S&P 500 index. Those shorts are fuel for a rally when one occurs. However, technically, the market looks weak, as shown in the chart below. Momentum continues to fade along with Relative Strength. Furthermore, the market has been making lower highs as of late and is threatening to break important support at the 100-day moving average.

This does not mean the market is about to have a deeper correction; I just don't like the price action, particularly in the smaller sectors of the market that are extremely overbought and have deviated from their means. As Greg Feirman recently noted:

"While the S&P is only about 2% off its all time highs, beneath the surface the market is showing signs of a top. Warren Pies tweeted today that there have only been two other times when Consumer Staples and Energy have been up more than 10% and Technology and Financials negative over the previous 63 trading days: 1990 (Desert Storm) and 2000 – both of which were tops. Health Care – another defensive sector – has also been outperforming the S&P of late."

The problem with the current correction, is the deviation between those defensive names which are extremely overbought, and the growth names that are extremely oversold. However, those growth names are where the earnings and revenue growth reside. With that in mind, the next rotation could be from the defensive names back to growth names which are now trading significantly cheaper on a forward PE basis. Such a rotation would be exactly what often happens as no one currently expects it.

Bitcoin Is On The Verge Of A Bear Market

The traditional definition of a bear market for a stock or equity index is a decline of 20% or more from the peak. However, for crypto, a 20% decline is considered normal volatility. Therefore, many crypto analysts claim a 50% drawdown is the line in the sand between "normal" trading and a bear market.

Per the MacroBond graph below, Bitcoin’s recent decline is now around 40-45%, approaching the critical 50% bear-market level. If it were breached, it would effectively mark the end of the fifth bull market, which began in early 2024, and the start of a new bear phase.

Dollar

Over the last 9 months, the dollar has been consolidating within the blue rectangular area, as shown below. A bearish breakout of this range is potentially bullish for stocks and precious metals. However, a bullish breakout may limit speculative behaviors in equities and precious metals while pushing bond yields lower.

Currently, the dollar index is in the middle of the band. It is approaching its 200-day moving average, which may likely prove to be resistance. However, a breakout above the 200-day moving average and a higher high may signal a bullish break from the range. Further supporting a bullish view is the MACD buy signal and the rising RSI. The two technical indicators are close to forming a bullish divergence if they hit higher highs before the dollar index does. Stay tuned!