U.S. home value growth is entering recessionary territory in late 2025.

With Zillow's value index growing by only 0.1% over the last 12 months.

The previous times we've seen home value growth this low have mostly been associated with economic recessions. (like 2008, 1991, 1982, 1973).

This confirms the comments made earlier this week by Scott Bessent, that the housing market is in fact in a recession.

The question is: will national home values finally dip negative in 2026, and which cities will be the best places to buy next year?

To find out, go to reventure.app and sign up for premium to see our 12-month forecast for your ZIP code. 1) While many are frustrated that home prices are still near all-time highs, the reality is that a housing market trending towards 0% nominal home price growth is one already well into a recession, given how abnormally low this appreciation is.

In the last 55 years, it has only happened 5 times. 4 were recessions. And one was the mortgage rate shock in 2022.

110 years of Home Price Growth v Rent Growth.

There's four distinct periods where home price growth greatly exceeded rent growth:

1943-1947: World War 2 boom
1974-1979: Inflation-era boom
1998-2005: Mortgage bubble boom
2016-2022: ZIRP / Pandemic boom

Amazingly - almost all of America's inflation-adjusted home price growth in the last century comes from these 4 periods.

From 1916 to 1970, if you exclude WW2, home price and rent growth moved in near lockstep with each other.

Since 1970 - home price growth and rent growth have decoupled, with home prices becoming much more volatile.

However, since 1970, home price growth tends to reverts back to rent growth. Suggesting that we will see the rental market outperform the for-sale housing market in coming years.

To access housing market data like this for your city, go to reventure.app and type in your ZIP code. 1) The housing market is actually fairly simple when you adopt a longer term outlook:

It's a function of inflation (measured by rent growth), demographics, and government intervention.

The profitability of investing in real estate has declined significantly over the last 75 years in terms of yield.

Returns today are near the lowest level on record (4.7%), and have been driven lower by three distinct periods over the last 75 years.

1) The 1970s inflation, which caused home prices to double in a decade, far greater than the growth in rent, pushing yields down.

2) The 2000s Mortgage Bubble, which caused prices to outstrip rent growth, and dropped the cap rate down to a record low 4.4%.

3) ZIRP period of 2010s + Pandemic, which produced outsized home price growth relative to rent growth, again driving cap rates down to a record low.

In the last several years cap rates have improved marginally as price growth has slowed, but not nearly enough to offset the increase in interest rates.

One has to wonder - are we coming to the end of a long cycle of cap rate compression, and will we see rental yields grow into the future?

Head to reventure.app/map to track cap rate and rent data in your market. 1) It's interesting to think about how different the real estate investing landscape was back in the 1950s.

For starters, there were fewer investors. The idea of owning multiple homes had no set in yet, and institutional investors were non-existent.

In this period, you could buy a house and rent it out at an unlevered cap rate of over 9.0%.

Home builders have 26.8% of all the homes currently listed for sale on the U.S. housing market.

The long-term average is only 15%.

While it would be great for builders to build more, we really need more existing owners to sell.

Particularly investors. 1) Home builder inventory is actually near a record high in 2025, while existing inventory is not even close to a record.

In fact, existing home inventory is not yet back to its 2019 levels.

Is anyone else concerned that the U.S. economy, and consumer spending, is now almost entirely reliant on the 2nd largest stock market bubble on record?

Long-term average Shiller P/E Ratio is 17.8x

Today we're at 39.8x.

Only time that stock market valuations were richer was in 1999. 1) Rising stock market valuations are continuing to drive consumer spending in America, with the Top 10% of U.S. households by income now driving nearly 50% of Consumer spending, according to Moody's.

By the end of Q4 2025, there will be more 6% mortgages than sub-3% mortgages. 1) The shift in interest rate composition of existing mortgage holders will have a big impact on new listings in future quarters and years.

As more and more mortgage holders take on higher rates, through the natural attrition of sales and refinancings, there will be more pressure to sell.

Lennar is showing you what has to happen in the housing market to drive sales.

They've cut prices 22%. And are now below pre-pandemic pricing.

The result? Sales orders have spiked.

Lennar's margins have compressed to 17.5% as a result of the price cuts. But that's just how it goes in a housing recession - to move inventory, and sell homes, you need to accept less.

Existing home sellers would be wise to take note. 1) Lennar's new order book is 2x bigger than it was prior to the pandemic, and they're gaining a massive amount of market share.

They're essentially showing everyone in the housing market what has to happen to bring sales back.

Most people still aren't paying attention, though.

We literally have the worst homebuyer demand on record according to the NAR's pending sales index.

Time for people to wake up and realize prices are the problem. 1) Fed cut rates almost one year ago, and demand went down.

Think about that. September 2024 was the first rate cut, and the pending sales index back then was between 76-79.

Now it's 72.

Buyer demand dropped after rate cuts.

Austin, TX's rental market has corrected hard.

Asking rents are down 18% in the last three years.

And now, rents are almost back to pre-pandemic levels.

Apartment developers in Austin are taking it on the chin after overbuilding in this market for the last 5 years.

The good news? Austin is now one of the most affordable markets in America to rent, relative to local incomes. 1) It's wild to see how rents in Austin have changed over the last six years.

July 2019: $1,279/month
July 2022: $1,631/month
July 2025: $1,344/month

28% boom.

18% correction.

And now rents are only 5% above the pre-pandemic norm.

The immigration boom from 2022 to 2024 is hiding a startling fact:

U.S. natural population growth has plummeted.

With growth from Births minus Deaths clocking in at only 502k in 2024.

That's down about 70% from the mid-2000s. 1) Plummeting natural growth can have a variety of consequences for the U.S., and is primarily driven by two factors:

Increased deaths, due to the aging of the population

Stagnant births, also due to aging, and due to lifestyle choices of younger generations

Historical cost of Buying v Renting.

This explains everything about the current housing market. 1) Today's premium to buy of $713/month is one of the highest on record, and a key reason why homebuyer demand is near record lows.

First-time buyers are doing the simple math, and deciding to stay renting, since it saves them money in the short-term.

For the first time ever, it is considerably cheaper to buy a new house than to buy an existing house.

Likely signals an inflection point in the housing market. 1) In June 2025, it was roughly 8% or $33,500 cheaper to buy a new house from a builder than to buy an existing house.

This is only the 6th time in the last 26 years it has ever been cheaper to buy a new house.

Immigration has dropped to essentially zero.

What will the housing market impact on demand be? 1) According to John Burns, from 2022-24, all of the growth in renter households came from immigration.

While only 5% of buyer demand came from immigration.

We did rate cuts last year.

It didn't work. 1) The myopia among many people in finance and real estate right now regarding round two of rate cuts is shocking.

Once again, people are getting jazzed up to think the Fed will "save the housing market".

Somehow forgetting that we went through this already last year.

North Port, Florida.

Getting closer to fairly valued.

Once the green line crosses below the grey line, it's a "buy signal". 1) A good question is how far undervalued prices could go.

In the last downturn in North Port, values became around 27% undervalued.

Dallas housing supply is through the roof.

Active listings measured almost 32,000 in July 2025.

The average for July going back to 2017 is only 20,000.

60% more inventory than normal. 1) The inventory spike is happening pretty much everywhere in DFW.

All major counties are now above a 50% inventory surplus.

The biggest problem in today's housing market is not mortgage rates.

Rather - it's homeowners clutching onto an unsustainable amount of homeowner equity.

Today, homeowners have over $34 trillion in equity on their houses - more than 2x higher than the 2006 bubble.

It's the biggest homeowner equity bubble ever. And it's keeping hard-working Americans locked out from buying a house (because prices are too high).

Sellers who come to market today are often refusing to cut the price to the market-clearing price, and even de-listing their homes. This is further perpetuating the worst housing affordability crisis we've seen in 40 years.

The solution: home prices need to correct, by around 15-20% on a national basis, to bring the market back into balance with homebuyer incomes and interest rates. This type of correction will not be that damaging to the economy, since most homeowners would still have plenty of equity. (in this scenario, homeowner equity would drop to around $25 trillion - still almost double 2006).

It's important that lenders, realtors, investors, and government officials understand that unsustainable prices and homeowner equity levels are what is creating the worst home sales transaction market in decades.

Not mortgage rates. 1) For perspective, today's homeowner equity levels are north of 115% of GDP, the highest level of all-time.

Indicating that home prices and equity growth have far outstripped the growth of the economy, incomes, and inflation.

It's not sustainable, and needs to correct.

Nashville's housing market was previously one of the biggest boom markets.

Now it has one of the biggest gluts of unsold inventory of any metro.

With nearly 11,000 homes for sale, the highest level in almost 10 years.

Nashville's inventory surplus is now at 62.7% above the long-term average. Indicative of a market that is in correction. 1) Home values in Nashville dropped -0.18% in June 2025 every month.

And the year-over-year value metrics in Nashville are now essentially flat, at +0.1% June 2024-25.

At Reventure, we are forecasting a -7.2% over the next 12 months.

Inventory in Nashville is through the roof.

Some neighborhoods now have 115% more supply than normal.

This excess supply is largely coming from investors selling, combined with a reduction in buyer demand.

Don't be surprised if home values across most of Nashville flip negative over the next 12 months.

Access the inventory map at reventure.app. 1) The supply run-up in some of these ZIP codes is wild.

Pre-pandemic inventory of 100 homes.

Now there's 300 homes.

Home builders have 9.8 months of supply on their lots.

Has only happened 6 other times in U.S. history.

5 times it led to a recession. 1) Long-term median Months of Supply is around 5.8 months.

Meaning today's home building market is 70% more oversupplied than normal.

U.S. homeowners have $34 trillion in equity.

That's almost triple the levels in the 2006 bubble.

As a % of GDP, it's the most housing wealth homeowners in the U.S. have ever had. 1) This record equity is a negative for the U.S. Housing Market.

It means sellers are holding onto an inordinate amount of housing wealth, locking prospective buyers out of the market.