The housing market is off to a complex start in 2026. While recent numbers suggest improving conditions for buyers and sellers in the short term, fresh data reveals some medium-term risks we shouldn't ignore. From shifting population trends to a surprising spike in corporate layoffs, here is what is shaping the economy right now.
1. Population Growth Hits the Brakes
The U.S. population is growing at its slowest pace since 2021, increasing by just 0.5% over the last year. The main culprit? A sharp drop in net international migration.
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Why it matters: Fewer people means less competition for housing down the road.
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The California Impact: California was one of only five states to see a total population decline (dropping by nearly 9,500 residents). If this trend continues, we could see softened demand for housing in the Golden State by 2027.
2. Job Cuts Spike, But Not Everywhere
January was a tough month for the labor market. Employers cut over 108,000 jobs, the highest January total since the Great Recession era of 2009. Tech and industrial hubs in Georgia, Michigan, and Washington took the hardest hits.
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The Silver Lining for California: Surprisingly, California bucked the trend. Layoffs in the state actually dropped compared to last year (8,286 vs. 11,862). This relative stability suggests the California labor market might be more resilient than the national average right now.
3. More Young Buyers are Entering the Market
Despite the noise, the American Dream is alive. The homeownership rate inched up to 65.7% in late 2025.
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Who is buying? The biggest winners were people under 35, seeing a 1.6% jump in homeownership.
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Equity Check: While the number of "underwater" mortgages (where the loan is bigger than the home value) ticked up slightly to 3.0%, it remains historically low. Homeowners generally still have strong equity cushions.
4. Consumer Confidence is creeping Back
For the third straight month, consumer sentiment has risen, hitting a six-month high. While families are still wary about inflation and job security, the general mood is improving. However, keep in mind this survey closed before the recent stock market volatility, so next month's numbers may look different.
The Bottom Line
We are looking at a mixed outlook for 2026. The economy is growing, and young buyers are finding ways to purchase homes. However, the combination of slowing population growth and rising national layoffs suggests that while the spring market might be busy, the long-term trajectory remains delicate.
If you are looking to move, keep a close eye on local employment data—real estate is becoming hyper-local this year.
Would you like more insights on how this trend could impact your real estate decisions? Give us a call or if you'd like to schedule a meeting, email us at [email protected]
