Zonda’s third-quarter housing market forecast webinar delivered a clear message: national housing conditions remain stubbornly challenging, but builders and developers still have actionable opportunities—especially in the Midwest, where new-home performance is outpacing much of the country.
Chief Economist Ali Wolf framed the national market as broadly flat year-over-year, constrained by affordability, confidence, and “higher-for-longer” financing conditions. Advisory Director Reid Randall followed with a Midwest deep dive showing stronger relative demand across multiple price bands, with market-specific insights on Chicago, Indianapolis, Minneapolis, and Columbus.
Watch the on-demand recording of the Q3 Housing Market Forecast webinar below, or read on for the key takeaways, to understand what we’re seeing across the national landscape and the midwest metros of Chicago, Indianapolis, Minneapolis, and Columbus.
The national housing market: flat, but hard to win deals
Presented by Ali Wolf, Chief Economist
Wolf described a market that’s stable on paper but difficult in practice:
- Year-over-year activity is essentially unchanged: “Generally speaking, we’re basically flat with where we were last year.”
- It feels worse than it looks historically: “It’s not actually as bad of a market as it feels when it comes to history.”
- Profitability pressure continues: “Margins are still compressed… 50% [of builders] have said their price cuts and/or their incentives are higher today…”
The bottom line, “we’re still in a market that feels like it’s stuck in a rut,” said Wolf.
Affordability is being reshaped by product mix
Wolf noted that entry-level supply has shrunk materially since 2019. “The under $350 [thousand] price point used to represent 42% of the market. That’s been cut in half.”
Meanwhile, higher-price product now dominates. “The greater than $500,000 price point… today is almost 50%” of the market.
Buyers still want to own—but need a catalyst
Survey data suggests ownership goals remain strong, even if timing has shifted: “Fewer than 5%…never want to own a home.”
But demand is waiting for conditions to improve: “Something has to change,” Wolf said, pointing to “lower mortgage rates…more confidence in job security…and…a lower monthly housing cost.”
Outlook: higher-for-longer rates, modest growth expectations
Zonda’s forecast remains cautious:
- 2026: “Flat to down”
- 2027: “Flat to up”
- Rates: “Somewhere between 5.8-6.8% for all of 2026 and into 2027.”
Midwest outlook: a relatively bright spot
Presented by Reid Randall, Director of Advisory
Reid Randall went on to share the midwest new home outlook. He highlighted a stronger pocket of performance across the region, saying, “The Midwest has a large pocket of green…one of the strongest markets when it comes to new home sales…”
Market snapshots
- Chicago: Household decline is “a meaningful headwind”—but growth is healthier in the key building counties, such as Will County and Kendall County, where there is positive household growth.
- Indianapolis: Inventory has tightened—“about six months of supply”—though starts have pulled back: “about 23% year over year.”
- Minneapolis: The only market shown as oversupplied: “currently rated as oversupplied,” with a split between downtown softness and steadier suburbs.
- Columbus: The most undersupplied market highlighted: “the most undersupplied that we’ve seen,” though recent permits skew multifamily: “a lot… are multifamily permits.”
The bottom line
Conditions may be “stuck,” but Zonda’s new home forecast was pragmatic: focus on value, product positioning, and submarket selection—because, as Wolf put it, “We still have a lot of opportunities.”
Watch the full Q3 forecast
This overview highlights just a portion of what was covered in the full webinar, including deeper market-level data, builder survey insights, and forward-looking forecasts.
Watch the full recording to access the complete outlook and detailed analysis.
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