The Housing Collapse Has Already Started, But the Worst May Be Ahead

What’s Really Happening in the U.S. Housing Market?

The U.S. housing market is showing cracks that many aren’t talking about. While home prices remain high, buyers are pulling back, mortgage rates are stuck around 7%, and listings are piling up faster than ever. The data shows a clear shift—one that sellers and buyers alike should pay close attention to.

In this blog, we’re breaking down what’s really happening behind the scenes. You’ll learn why so many homes are sitting unsold, what’s causing the slowdown, and why the worst might still be ahead. From rising inventory to the coming “Silver Tsunami,” we’ll walk through the numbers, the trends, and the signals you don’t want to ignore.

Let’s dive in.

More Sellers Than Buyers

Right now, there are nearly half a million more sellers than buyers in the U.S. housing market. That’s not just a number. That’s a red flag. Mortgage rates are hovering around 7%, home prices remain sky-high, and listings are starting to stack up.

Buyers are backing off. Sellers are getting nervous. And while the media might not be sounding the alarm, the market is shifting fast. If you’ve been waiting for a sign that the housing market is cooling, this is it.

Mortgage Rates Are Still High

I’m Noel Lorenzana. I’m an accountant, and as a side note, the tax benefits of homeownership are mostly a thing of the past. But when it comes to the housing market, you don’t need a degree in economics to feel that something is off.

The average mortgage rate is around 7%, and it could climb higher. Mortgage rates follow bond yields, and bond yields are rising. Why? Because investors are getting uneasy about U.S. debt. Fewer buyers for U.S. Treasuries mean yields need to rise to attract interest. As yields go up, mortgage rates go up too.

Unless inflation cools off fast or the government cuts spending, rates are not coming down anytime soon. In fact, they might go even higher.

Least Affordable Market in Modern History

Pair those high mortgage rates with home prices that are still up 2% year over year, and you end up with one of the least affordable housing markets we’ve ever seen.

The median monthly mortgage payment now sits at $2,860. That’s just $25 under the all-time high. And that doesn’t include property taxes, insurance, maintenance, or repairs. In some areas, owning a home now costs nearly twice as much as it did just a few years ago, and you can thank inflation for that.

Buyers Are Pulling Back

Buyers are pulling back. Pending home sales are down. Redfin says 14% of contracts are being canceled, which is the highest rate for this time of year since 2020.

Some younger buyers are completely priced out. Others are waiting for sellers to give in, and sellers are starting to budge.

Price Cuts Are Spreading

In April, one in three homes in Florida had a price cut. Nationwide, nearly one in five listings had a price reduction. Even new construction homes are sitting longer.

Builders are cutting prices and offering incentives. You’re not just competing with the last home sale anymore. You’re up against the builder next door offering a rate buy-down and a brand-new HVAC system.

Investors Are Stepping Back

Institutional buyers are stepping aside too. Hedge funds used to buy up to 35% of homes in Sun Belt markets. Now, many have paused. That means thousands of homes are hitting the market again, but with fewer buyers and less investor demand.

Boomers Are Trading With Boomers
Here’s something interesting. The median age of both buyers and sellers is 58. That means baby boomers are mostly trading homes with other baby boomers. Meanwhile, younger buyers are sitting out, squeezed by student debt, high prices, and wages that haven’t kept up.

Inventory Is Surging

So what happens when sellers keep listing homes but buyers stop showing up? You get an inventory surge. It starts slow and then builds.

Active listings are up nearly 12% compared to last year. That’s the biggest increase we’ve seen in five years. In places like Seattle, Houston, and Boston, the jump is closer to 15%.

Sellers are trying to cash out while prices still look good, but the demand just isn’t there. Redfin reports that $700 billion worth of homes are currently sitting on the market, and nearly half of that—$330 billion—has been on the market for more than 60 days. That’s stale inventory.

Homes Are Sitting Longer

And when homes sit for too long, it pressures sellers to cut prices just to stay competitive. Because today, it’s not just about what sold last month. You’re up against the unsold home next door and the builder down the street offering deals.

Real-Time Observations

This isn’t just happening nationwide. I’m seeing it where I live, just north of Chicago. Listings are stacking up. One home I’ve been tracking dropped from $900,000 to $800,000 in just a few weeks. And I have a feeling more price cuts are coming.

Builders Are Feeling the Heat

Builders are starting to feel the pressure. In Florida, some communities are seeing slower-than-expected sales. Actual numbers are falling short of projections. Nationwide, price reductions are accelerating.

In cities like Tampa and Jacksonville, nearly one-third of listings have dropped their prices. That’s a strong signal that sellers are adjusting their expectations.

Don’t Forget the Shadow Inventory

There’s also the shadow inventory. These are homes that haven’t been listed yet but are sitting, waiting to hit the market. When they do, it will add even more downward pressure on prices.

Buyers Have Options Again

The bottom line is this: buyers now have options. That changes the game. Sellers have to adjust to the new reality.

This isn’t just a seasonal slowdown. It could be a full reset. The days of bidding wars and waived inspections are gone—at least for now.

Where Is This Heading?

We’re not looking at a 2008-style crash, but we are seeing a slow-motion correction. The market is coming back down to Earth, and it might not land softly.

Buyers are gaining leverage. Listings are sitting longer. Sellers are cutting prices. And here’s the kicker—over the next 20 years, around 20 million homes are expected to hit the market as baby boomers either pass away or downsize.

The Silver Tsunami Is Coming

This wave is called the Silver Tsunami. It’s not making headlines yet, but it’s coming. And if today’s buyers can’t afford homes and tomorrow’s heirs don’t want the ones they inherit, we could see a supply glut like we’ve never seen before.

A Slow Collapse

So yes, in many ways, the housing collapse has already started. It won’t look exactly like the last one, but it could still leave a lasting impact.

I’m not saying this to scare anyone. I’m saying it because the signs are there. If you’ve been watching your neighborhood and wondering why that house is still on the market, you’re not alone.

Let me know—are you seeing more price cuts, more listings sitting, or slower sales where you live? Share your thoughts in the comments on the YouTube video.

If this helped you see the housing market in a new light, feel free to share it with a friend or family member who's thinking about buying or selling.

Thanks for reading. Stay safe. Stay informed. And I’ll see you in the next one.