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US housing faces a decade of weaker demand, MBA researchers warn

Categories: Financial News, Real Estate + LendingPublished On: June 22nd, 2026Comments Off27.8 min read

Evelle Dai

mortgage

US housing faces a decade of weaker demand, MBA researchers warn
A new MBA white paper warns demographic shifts may put downward pressure on US home prices

A new white paper from the Mortgage Bankers Association is urging mortgage professionals to look beyond the current supply shortage and prepare for a housing market shaped by fundamentally weaker demand in the decade ahead.

Released this week, “Implications of a Persistent Slowing in Housing Demand” examines how population trends, construction activity, and affordability pressures have evolved since the 2008 financial crisis, and what those shifts mean for home prices, household formation, and mortgage origination volumes going forward.

“Over the past several years, growth in housing demand has slowed as new housing supply has entered the market in many regions,” said Mike Fratantoni, senior vice president and chief economist at the Washington, D.C.-based Mortgage Bankers Association (MBA).

“While affordability challenges remain significant, MBA’s research highlights the importance of looking beyond today’s market conditions to understand the long-term forces shaping housing demand. These findings can help industry participants and policymakers better prepare for future changes in housing and mortgage market dynamics.”

From shortage to surplus risk
The report traces how strong millennial household formation in the post-crisis years pushed housing demand well beyond construction capacity, producing estimates of a national housing shortfall ranging from 1.5 million to 7.3 million units.

Pandemic-era demand, accelerated by historically low mortgage rates, then pushed home prices and rents to new highs while builders, particularly in multifamily housing and across the South and West, ramped up output.

As Fratantoni told Mortgage Professional America in its analysis of the shifting US housing market outlook, “in more and more markets around the country, it’s going to be a buyer’s market as opposed to a seller’s market.”

By 2025, that supply had reached the market. Vacancy rates rose, rent growth moderated, and for-sale inventory expanded, most visibly in Sun Belt metros where construction had been most aggressive.
Affordability improved modestly, as income growth outpaced gains in home prices and rents, though housing costs remain well above pre-pandemic norms across most markets.

What the next decade may bring
Looking ahead, the paper identifies a convergence of demographic headwinds: an aging population, declining fertility rates, smaller younger adult cohorts, and reduced immigration are all expected to slow household formation meaningfully over the next ten years.

At the same time, MBA researchers project that housing supply will grow gradually as aging Baby Boomers transfer existing homes to younger generations.

If residential construction remains elevated while new household formation weakens, the report cautions, supply growth could outpace demand in some markets, exerting downward pressure on home prices.

For brokers and originators who have been tracking the MBA’s 2026 single-family origination volume forecast of $2.2 trillion, the white paper adds a longer-term dimension: slower demand could affect not only production volumes but also borrower equity accumulation and credit performance, all critical variables for the long-term trajectory of US housing affordability for borrowers.

The paper is co-authored by Fratantoni alongside Joel Kan, MBA vice president and deputy chief economist; Judie Ricks, MBA associate vice president of commercial real estate research; and Edward Seiler, executive director of the Research Institute for Housing America (RIHA) and MBA associate vice president of housing economics.

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