Are Home Prices Falling? What Lance Lambert Says Happens Next

Are home prices falling? The short answer

Nationally, not by much on paper. Locally, in some places, yes. In a long interview with host Jon Brooks, ResiClub CEO Lance Lambert describes the national price picture as close to flat in nominal terms, with sharp declines in specific metros, especially across the Sun Belt. Because wages and general prices have kept rising, flat nominal prices still mean a decline once inflation is taken into account.

What changed recently is the cost of borrowing. Lambert says the average 30-year fixed mortgage rate has climbed back to roughly 7.5%, after dipping to 5.99% in February. He argues that this reversal has revived a wave of market softening that had been losing steam. This article walks through his data points, adds context on how to read them, and lays out the counterarguments.

Rates have undone much of this year's progress

Lambert's starting point is affordability. Putting together home prices, incomes and borrowing costs, he calls conditions for a typical financed buyer about the worst in roughly 40 years. For a deeper look at that long-run measure, see our explainer on housing affordability at a 40-year low.

Earlier this year, he says, things had eased a little. Nominal national prices were close to flat, incomes had edged up, new-home builders were cutting prices, and the mortgage rate had rolled over from its cycle high. Then rates rose again over about six months.

Two points from his argument stand out:

• Duration matters. Lambert notes that rates have sat near this level for a couple of weeks. The previous longest stretch at a comparable level was about a month in fall 2023, and he says that period accelerated softening in the market.
• Seasonality compounds it. Housing activity normally cools in the second half of the year. A fresh rate-driven slowdown arriving at the same time, he says, adds to the usual seasonal downshift.

His practical read: sellers who have already cut their asking price and have been listed for 100-plus days, particularly those who must sell, are the ones most exposed to buyer pushback this autumn.

For reference, the weekly benchmark for rates is the Freddie Mac Primary Mortgage Market Survey. Check the current reading yourself rather than relying on any single quote.

Which metros are down, and by how much?

The video gives only a handful of hard figures, but they paint a clear picture of where the weakness is.

Two cautions on that table. First, "overvalued" figures come from Lambert's own models, which weigh prices against local fundamentals such as incomes. They are estimates, not official statistics. Second, the Jacksonville new-build range is his reasoning about hidden discounts, not a published index.

Jon Brooks adds local color from Florida, citing an income of around $120,000 needed to buy a typical home against a household median of about $68,000. Those are the host's figures and should be treated as his estimates. For more on declining Florida markets, see Florida counties where home prices are falling fastest.

Why the Sun Belt fell and the Northeast held

Lambert offers a three-part explanation for why boom towns have given back the most.

1. The run-up was too intense. Demand can swing faster than the housing stock can. He cites a 2022 Federal Reserve estimate that housing starts would have needed to rise about 300% to absorb pandemic-era demand, which is not physically possible given labor, land and materials. National prices rose roughly 40%, he says, while some boom markets rose 60% to 80%. The hotter the climb, the more detached prices became from local incomes.

2. Migration is cyclical. Many Sun Belt buyers were higher-income movers from expensive coastal and Northeast metros. When rates rose, the payment math flipped. Lambert gives an example of a mover swapping a roughly $2,000 monthly payment for about $3,600, which erases much of the tax savings from a no-income-tax state. He believes the slowdown in domestic migration is a cyclical low, not permanent, but says it could take years to reverse.

3. Supply could respond. Growth markets have room to build. Investors poured capital into multifamily, build-to-rent and single-family development, adding discounted competition to the resale market.

By contrast, he says Northeast and Midwest markets saw smaller run-ups, less new construction and fewer discounted new homes competing with resales. About a fifth of normal listing churn has vanished nationally, he adds, and much of it is would-be state-to-state movers. A lost seller in one place and a lost buyer in another leave both markets with fewer transactions and firmer prices where supply is already thin.

He is not complacent about those regions, however. He flags Indianapolis and Grand Rapids as Midwest markets to monitor for frothiness, and Hartford as the standout on valuation.

Builders, FHA loans and the distress question

The most speculative section of the interview concerns what could go wrong. Lambert's argument is conditional, which is worth stressing.

Builders have shifted away from speculative building toward built-to-order, he says, because unsold completed homes eat into margins. He cites Lennar's average selling price net of incentives falling 24.2% year over year, with roughly a third of that drop tied to mix shift, such as smaller homes and more sales in its lowest-priced region, Texas. He puts Lennar's incentives at around $54,000 per home. For wider context on this trend, read our piece on new-home unsold inventory and builder incentives and the effect on Southwest Florida resale values.

He also says builders are leaning more heavily on FHA mortgages, which typically carry low down payments and higher debt-to-income ratios, and on rate buydowns. In a downturn, those buyers have thin cushions, particularly if they purchased at peak prices with incentives baked in. Brooks says FHA delinquency is around 11%, citing an analyst's data, and describes a growing number of short sales among 2023 to 2025 new-construction buyers in Florida.

Lambert's caveat is important: a real distress wave would likely require a weaker economy. Foreclosures are rising from very low pandemic-era levels, he says, but this has happened with unemployment around 4%. Equity matters too. Homeowners with little equity have fewer options if they lose income. Our look at rising foreclosures and home prices covers whether current distress is large enough to move prices.

What about the "housing shortage"?

Brooks challenges the shortage narrative. Lambert gives a nuanced answer. He sees inventory as largely downstream of demand, tight when demand surged and looser now. But he accepts that some supply-constrained metros, including New York, Seattle, Los Angeles and San Diego, genuinely struggle to add homes because of geography and regulation, and that this pushes people toward Sun Belt cities, feeding the migration cycle.

He also describes a mismatch within markets. Starter homes are often far from job centers, while mid-priced new construction is out of reach for local incomes. Meanwhile, older owners with low-rate mortgages are staying put in desirable school districts, so those neighborhoods stay competitive even when metro averages weaken. The millennial cohort born around 1989 to 1993 is a large buyer group, Lambert notes, which supports demand in those pockets.

Limits and counterpoints

This is a single, long conversation, and several caveats apply.

• The sources are opinions with selected data. Lambert is data-driven, but valuation gauges depend on modeling assumptions. Other analysts, as he acknowledges, think Austin is now undervalued.
• Rates can move quickly. His outlook depends on the 7.5% level persisting. He says a drop of about 80 to 90 basis points would put affordability back where it was earlier this year.
• Local anecdotes are not a trend. Brooks's examples from Florida builders and short sales are real-world signals but not national statistics.
• Lower prices are not guaranteed everywhere. Lambert says even rising existing-home sales could coincide with flat or lower prices, but that is debated. Sales volume is currently depressed, which he describes as near levels last seen in the financial crisis.
• The video is long and partly truncated here. Statements near the end, such as spending concentration among top earners, were not fully captured.

For the official picture, compare national figures from Case-Shiller on FRED, NAR existing-home sales, and Redfin or Zillow metro data.

What this means for you

This is general information, not personal financial advice.

Buyers

• Look at how long a listing has sat and how many price cuts it has had. Lambert sees leverage building for homes on the market 100-plus days.
• Ask builders what incentives are available, but compare the full cost: price, rate buydown terms and closing help. Brooks says year-end is when builders are most willing to negotiate.
• Budget for round-trip transaction costs and ongoing upkeep. Brooks cites about 8% for buying and selling and 1% to 2% a year for maintenance. Those are his rules of thumb.

Sellers

• Price to the current local market. Sellers who list high and later withdraw may not see a better market next year, particularly in softer metros.
• Understand your net proceeds, not just the sale price. See our guide on the cost to sell a house.

Owners and small investors

• Owners with fixed-rate mortgages and ample equity face little pressure. Those who bought recently with small down payments should keep an emergency cushion.
• Investors should run cash-flow numbers with realistic taxes, insurance and repairs. Brooks says prices in Jacksonville would need to be roughly 31% to 42% lower to produce positive cash flow at current rates. That is his own calculation, so test your own assumptions.

What to watch next

• Weekly mortgage rates. A sustained move above or below roughly 7% will set the tone for fall and winter.
• Inventory and price cuts. Rising listings alongside more cuts would confirm Lambert's thesis of renewed softening.
• Labor market data. Employment is the swing factor for distress. Rising unemployment would turn a slow grind into a potential wave of forced sales, especially among recent low-down-payment buyers.
• Builder results and incentives. Further margin compression or higher incentives would signal weaker demand.
• Foreclosure and delinquency trends, especially FHA performance in recent new-construction vintages.

Lambert's own framing is that the affordability reset is early, perhaps the first inning after rates pushed it back, while nominal declines in the Sun Belt are further along. The direction of travel is clear in some metros and murky nationally, and that gap is the story to follow.