Zillow Drops Final warning. Mortgage Firms Implode 70%.

And let's move on to the home builders. What are they up to? What are they doing? They are struggling, maybe not as bad as the institutional investors are, but I'll leave that up to you to decide because annual brand new home sales are down. Now they did see a small uptick in the amount of homes that were sold in June of brand new houses. It went up 1.6% to an annualized rate of 628,000 new homes. So if they kept selling at the rate that they sold in June, then it would be about 628,000 homes sold throughout 2026. But before June, new home sales have been dropping for three consecutive months. And while the media and the headlines like to celebrate that uptick in June home sales, the reality is year over year, the brand new home sales are actually down 5.6%. But you see the media, they like to cherry pick these headlines that make things look much better than they really are. But I'm here to sift through the noise and show you guys what's really going on. In fact, it's really not looking good. Look what Zillow had to say here. Through the first half of 2026, home builders have sold fewer new homes than in any comparable stretch going back to 2017. And the year to date pace of home sales is running below every year from 2018 through 2025. So they are selling fewer brand new homes than they have in almost a decade right now. And this is with major price cuts and major incentives. I've shown you guys in previous videos that these incentives can be $20,000 worth of incentives on top of maybe a 20 something percent price cut. And here's the thing, this isn't happening because there's no brand new homes for sale. It's because the homes that are for sale aren't being sold. Just like what's happening on the resale market. This is becoming an overall trend throughout the whole housing market. And guess what? This is only just the beginning for these home builders because the number of unstarted homes for sale rose to its highest level of the year, which these are all homes that they have planned to start building, but haven't started building yet. So their pipeline is fuller than it's been in a year of unbuilt homes, and they already can't sell the ones that they have listed for sale now. In fact, the number of unstarted homes for sale is now almost equal to the number of completed homes for sale. So imagine the current amount of homes for sale that are brand new in the inventory doubling. That's the situation that they're looking at right now. The year over year median sales price of these brand new homes went down 2.7% to $398,000. And keep in mind, brand new homes now are cheaper at the median price point than a median resale home, guys. Median resale homes are about $430,000, give or take, in the United States right now. Brand new, it's 398,000. When you look at the average sale price, it's actually even worse. It dropped 6.5% to $475,000. So no matter which way you slice it, brand new home prices are falling, which is great news for affordability. But apparently no one cares because no one's buying. Here's the reason why Zillow Economist says these homes aren't selling. Higher mortgage rates, softer hiring, sticky inflation are all discouraging the household formation that ultimately drives home sales. Well, I agree with most of that. Higher mortgage rates do play a part. Prices are still an issue, obviously, as well. The job market is a huge problem. So the softer hiring, yes. Sticky inflation, that is the whole reason that this is happening. So yeah, for once, Zillow Economist kind of nailed it. They just left out prices, which they always conveniently do. Here's the interesting thing, too. When it comes to brand new home sales, they almost can't even use mortgage rates as an excuse. You know why? Because most home builders offer mortgage rate buy downs. That's one of the incentives that they offer to get these homes sold. And that just means they're going to offer you a lower mortgage rate than what you could get from a traditional lender. And usually it's temporary. Sometimes it's permanent. But it can be up to two or three points lower than what you could get for a conventional loan. So if you're looking at a 6.5% mortgage rate from your bank right now, home builder might give you a 4% rate for the next three years, and then it will go up to a 6.5% rate. I've also seen instances of permanent buy downs where they give you a permanently lower rate to like 5%, which is still a noticeable savings over 6.5%. They say another reason why these homes aren't selling is because a lot of households are banding together. You're seeing a lot of young people move in together. You're seeing young people move back in with their parents. And household formation is basically at an all-time low because people can't afford to live by themselves anymore. I love this part of the story too, because this almost makes me laugh, guys. They say, where do we go from here? If people won't buy new houses, even at lower prices, how can we work towards fixing the home affordability problem? And you know what they say? You know what their answer to this is? This is just too funny. They say that building more homes is still the best answer to solving the housing affordability crisis. So they're like, well, we can't even sell the homes that we're already building now, but if we build more, then somehow people are going to be able to afford them, which is just a joke, you know? There is some truth to that when you look at supply and demand and how economics work, because on the other hand, if they do build more homes, even though no one can buy the ones they're building now, then eventually the prices of these brand new homes and they continue crashing downward like they are now, and it might come to a point where wages rise enough and the affordability of these homes keeps going down and down and down, then people might actually be able to buy them. But are the home builders really going to want to take that loss? Probably not. And a lot of these home builders have already said that future home starts are going to be going down. They are planning on building less homes into the future because they recognize that the demand is through the floor right now. But they want to know, where do we go from here? How about fixing the economy, guys? That's the problem that no one ever wants to address when talking about housing. If you look at when housing was affordable, what was also true at the same time? Oh, we just didn't have all these economic problems. We didn't have runaway inflation. We didn't have wages not keeping up with inflation for decades now. And that finally coming home to bite everybody. You know, that wasn't an issue when people could afford homes. All this started really, really happening back in 2005, 2006, when the first housing bubble got really out of control. And the government and the feds answer to that problem just made things exponentially worse. And every administration and fed since then has just doubled down on a playbook that never worked. Right now, as of May of 2026, 61% of home builders are offering incentives to get you to buy the home. Home builders also said they plan on building smaller homes with less amenities. I've talked about this before. Everything from smaller lot sizes to smaller rooms in the house, to even fewer windows in the house. Guys, these are the things that they're going to do to build more affordable homes in order to get people to buy them. It's just kind of crazy that in 2026, and we have AI and all these crazy things that are supposed to be able to make life so wonderful that we can't even figure out how to sell homes. But it's really not that complicated. It's just that no one wants to address the elephants in the room that are going to make it possible to sell homes. They just want to kind of step around those elephants all the time and hope that things are just going to get better on their own. But I can assure you they won't.