The spring real estate rebalance for buyers and sellers
Featuring
A conversation with Dr. Selma Hepp and Allie Barefoot
The 2026 spring housing rush has created a deeply fragmented marketplace. While national home price growth has slowed to a multi-year low of 0.7%, a stark divergence has emerged between regions. We are now seeing two distinct realities: a minor price correction across highly appreciated coastal zones, contrasted with a sudden, competitive pricing upswing across the Midwest and Northeast.
Beyond baseline interest rates, the single largest barrier facing modern buyers is the sheer size of the initial equity requirement. According to Cotality data, the out-of-pocket costs required to finalize a standard property transaction have escalated to an average of $80,000 at the closing table.
Data in Context host Allie Barefoot breaks down this rebalancing landscape with Cotality’s Chief Economist, Dr. Selma Hepp, and outlines the exact strategies required to confidently step into the upcoming buying season.
In this episode:
1:20 - Tracking the drop in mortgage rates and market optimism.
4:08 - Uncovering the stark geographical variation in housing options, noting a heavy volume of new construction concentrated in the South.
6:18 - The cost to close and the out-of-pocket saving crisis.
9:05 - Defining the shifting power balance, explaining that neither buyers nor sellers hold a distinct, definitive upper hand in today's balanced market environment.
Transcript:
Allie Barefoot: Welcome back to Data in Context. I'm Allie Barefoot with Cotality. This episode is a part of a mini-series where we break down Cotality's monthly Home Price Index report. As we're heading into the spring home buying season, the market is sending some fascinating and complex signals. Mortgage rates are fluctuating around 6%, and for the first time in years, more homes are hitting the market. We're essentially seeing two different speeds: a correction in the coastal markets, but a massive surge in the Midwest and Northeast. Between falling rates and a long-awaited boost in inventory, there's a real sense of momentum. So today, we're joined by Cotality's Chief Economist, Dr. Selma Hepp, to help us navigate these mixed signals and find out what this rebalancing phase means for sellers and buyers this spring. Let'sgo on ahead and jump into today's questions with Selma. Welcome back to Data in Context, Selma.
Dr. Selma Hepp: Thanks, Allie. Thanks so much for having me back.
Allie Barefoot: Yes, it's always my pleasure. Let's go on ahead and start off with the numbers that everybody has been talking about. The national price growth has hit a three-year low of 0.7% according to January data in Cotality's March Home Price Index report. Yet, there seems to be more optimism than we've seen in the last couple of years. Why is the sentiment on the ground so much warmer than the data suggests? What are some green flags that you're tracking right now heading into the spring home buying season?
Dr. Selma Hepp: Well, a number of reasons. You know, we are finally seeing mortgage rates come below 6%. There were a couple of periods where mortgage rates dropped below 6%, so mortgage rates have been coming down. If you recall, a couple of years ago we went over 8%. So that's, you know, in consumer mind, a significant slowdown in mortgage rates, and that helps affordability. As a result of that affordability, too, is at a three-year best. So, you know, we're seeing some improvements in some of that sentiment around how hard it is to get into the housing market. The other thing we know is that the demographics are very positive for the housing market. We do have a lot of pent-up demand. There are a lot of young buyers that have been sitting on the sidelines, and they're waiting to enter the housing market. And we see them slowly coming back as soon as mortgage rates come down. We see folks coming into the housing market. So after the three-year low in terms of housing market activity, we can see some green shoots that suggest that the better housing market is ahead.
Allie Barefoot: And one of those green flags that you mentioned in March's Cotality Home Price Index report is that inventory is finally rebounding, which is music to my ears. But I'm a little bit more curious about the source. Is this primarily new construction hitting the market, or have we finally started to see resale inventory return?
Dr. Selma Hepp: Yeah, it's actually a bit of both. You know, we have seen existing home sales available for sale increase. They bottomed out in 2022, and they've been coming back since then. So we are now at the closest level essentially that we were back in 2019 pre-pandemic. So that's on existing home sales side. At the same time, new construction has also been recovering over the last decade. And while we've seen ups and downs in terms of the availability of new homes for sale, it's still at the highest level that we've been since basically the Great Financial Crisis, and also significantly higher than we were pre-pandemic. So on both ends, we're seeing more inventory and more options for potential home buyers. Now, you know, there is quite a bit of variation of that inventory across markets. In South and Southeast, maybe some parts of Mountain West or Desert West, we have seen a lot of new construction. But in markets that tend to be continue to be stuck, we haven't seen a lot of new construction, and there also hasn't been a lot of existing inventory available for sale. So it's a mixed picture, but overall, I can say that nationally we're looking at better inventory than we have over the last few years.
Allie Barefoot: Which is super exciting to hear that nationally there's going to be a lot more opportunities, like you said, for those buyers that have been on the sideline for a while as well. And I want to go back to what you said. You noted that mortgage rates have hit a three-year low, but in previous years, lower rates could typically trigger some bidding wars. With the national growth rate that we see now, do you expect the same frenzy that the spring home buying season typically brings, or is a buyer more cautious this time around?
Dr. Selma Hepp: Yeah, certainly, I would say that buyers are definitely more cautious. And because they have more options now than they have in recent years—that they had in recent years—it's making them less likely to participate in these bidding wars. And so in Cotality's data, we observed that about 20% of homes currently are selling over the asking price, and that's a five-year low. However, you know, this trend is affected by seasonality. So we're looking at February data, but by April—March, April, May—you see seasonally an increase in bidding among buyers because there are more buyers out there. And so, you know, if we continue along the pre-pandemic trends that we are now observing, that means by peak season, spring home buying season, we'll see about 30% of homes selling over the asking price. Again, much less than 60% to 70% that we saw at the peak of the pandemic, but back in line to where we were pre-pandemic.
Allie Barefoot: And Selma, Cotality data shows that the upfront costs to afford that home, it's now becoming around $80,000 just to close. And that is a big number that is keeping some home buyers on the sideline for even longer. Even if mortgage rates drop below 6% or well below 6% this spring, does that matter if the entry fee of a median home is now well out of reach for the average Gen Z or possibly a first-time home buyer with that $80,000 at the cost of close?
Dr. Selma Hepp: Yeah, it is, unfortunately. The down payment is the most difficult thing for young buyers to come up with. You know, with the existing homeowners, they sell a home, they have proceeds from that sale, and they can use that for a down payment. Young, first-time buyers in particular have to save up, and it takes much longer to save up $80,000 say than, you know, $50,000 or $60,000 pre-pandemic. So that is often the biggest obstacle for young buyers. And surveys have shown that, you know, these young buyers can otherwise afford a monthly payment, but it is the down payment that makes it almost impossible for them to enter the housing market.
Allie Barefoot: You noted that locations in high job growth, they also tend to have the largest inventory deficits. For a buyer this spring, how does the local economy actually impact finding a home?
Dr. Selma Hepp: Yeah, I mean, it's almost like a double-edged sword, you know? Because if you have a very strong economy, you're more likely to have more buyers out there. So you're more likely to have to compete against these other buyers that are also looking to buy a home. But at the same time, strong job market or strong economy means there are plenty of jobs, wages are likely to be growing, and it's easier at that point to enter the housing market than when you're worried. I mean, I think the issue right now for many buyers out there is that they tend to be worried about future of the labor market, future of the economy, and that's actually holding them back. So, you know, that's why I call it a double-edged sword. It is good because if people are employed, they are more likely to be buying a home, but then they are more likely also to be facing higher competition from other buyers.
Allie Barefoot: Right, and then of course with more inventory, that can also lead to more bidding wars as people find the home that they want, and then obviously they want to lock that down. And, you know, there's a lot to cover as we're heading into the spring home buying market. But my last question that I have for you here, Selma, is: what is one thing that both buyers and sellers need to keep in mind as they enter the market in this spring? You know, I know that there's a bit of a rebalancing phase going on right now per the Cotality Home Price Index report, so what is something both sides should know?
Dr. Selma Hepp: Yeah, I think this whole balance—more balanced market—is an important concept to keep in mind right now because we're entering a phase that's neither—in which neither party has a definite upper hand, you know? Maybe pre-pandemic it was a bit more of a buyer market. During the pandemic, it was a bit more of a seller market. And now it's—it's more balanced between the two parties. And so, you know, for potential buyers, I would say, you know, inventory is loosening, meaning there is more inventory, so they have more options. But at the same time, there is risk when you're waiting for too long because, as I said, things heat up, especially coming into spring home buying season, especially in markets that have stronger local economies. And so you may be waiting a little too long sometimes and then lose out on that opportunity. And then for the sellers, you know, what's important for them to keep in mind is that it is a different market, and it's not like they will sell the home as soon as they list it, as was the case during the pandemic. So they have to be more sensitive to where the buyers are and the fact that buyers are more intentional. Buyers may be asking for more concessions. They will be much more interested in inspection reports than they were during the pandemic. And also, they're facing competition from these new builds. We talked about how much higher the number of newly built homes are there available for sale, and so in some markets, existing homeowners that are trying to sell are facing competition from these new builds as well.
Allie Barefoot: Sounds like it's definitely going to be an entire ecosystem to get a sale done from both parties. So it's going to be a very interesting spring home buying season, Selma. Thank you so much for giving us a little bit of insight from what you're seeing and Cotality data is seeing, and I'm looking forward to following up maybe at the end of the spring home buying season and seeing where we're at as well.
Dr. Selma Hepp: Sounds good. I look forward to it, too. I hope it's an exciting one. [laughs]
Allie Barefoot: Thank you so much, Selma. Thank you so much again to Dr. Selma Hepp for joining us here on Data in Context. And thank you guys so much for listening. If you haven't already, go on ahead, hit that subscribe button for me, and as always, if you want to find out more information, head over to cotality.com.
