UPDATE: As of this morning, 43.4% of all US homes for sale are now undergoing price cuts.

This is the highest read all year, up an additional 70 basis points from this time last week.

Two tiers continue to emerge at the top of price cutting behavior.

Tier 1 (highlighted in white) – Danger zone:
Oregon: 52.3% (+96 basis points week on week)
Colorado: 52.1% (+1.2% week on week)

Tier 2 (highlighted in blue) – Elevated on watch zone:
North Carolina: 49.1% (+82 basis points week on week)
Indiana: 48.9% (+62 basis points week on week)
South Carolina: 48.4% (+20 basis points week on week)
Texas: 48.2% (+62 basis points week on week)
Utah: 47.8% (+20 basis points week on week)
Arizona: 47% (flat week on week)

Notably, the rate of acceleration in the tier 1 danger zone states of Oregon and Colorado is outpacing tier 2.

— Jason Lewris (@jasonlewris) October 12, 2026

ChatGPT

his is becoming a very interesting addition to our Minsky Moment housing-credit thesis, especially alongside the deteriorating FNMA and Freddie Mac charts.

The striking feature isn’t simply that 43.4% of active listings have experienced price reductions. It’s the geographical breadth and the fact that the weakness extends well beyond the familiar pandemic-boom markets.

What jumps out

These are figures from the supplied PARCL Labs graphic, not independently verified national housing statistics.

Three observations stand out.

1. Oregon and Colorado are leading the deterioration. More than half of active listings show price cuts. Both states also experienced meaningful weekly increases.

2. The Southeast is joining the western housing correction. North Carolina at 49.1% and South Carolina at 48.4% deserve particular attention, especially given our examination of property insurers and catastrophe exposure.

3. Indiana at 48.9% is especially revealing. This isn’t simply a story about speculative second homes in Florida, Arizona, and the Mountain West. The pressure is appearing in a more conventional Midwestern housing market.

One important distinction: 43.4% of listings having price cuts does not mean 43.4% of all American homes are declining in value. It measures seller repricing among active listings, and the interpretation depends on the provider’s methodology and measurement window.

Independent confirmation is emerging

Redfin’s October 12 release provides a particularly important second data point:

• Pending home sales fell 4% month over month in September, reaching their lowest level since 2014 outside the pandemic shutdown.

• Available housing supply reached its highest level since March 2020.

• 14.5% of September purchase contracts fell through, the highest cancellation rate in Redfin’s records.

  

  PR Newswire

That last number catches my attention. Contract cancellations can be an early indicator of financing problems, appraisal gaps, deteriorating buyer confidence, or buyers exercising newfound bargaining power.

Redfin also reports a much lower price-cut percentage, around 21% in recent reporting, because its rolling measurement differs from Parcl’s active-listing measure. We shouldn’t compare those percentages directly.

Business Insider

+1

How this could migrate into credit losses

The critical distinction is that falling collateral prices alone don’t automatically cause defaults. The dangerous combination is falling equity plus a forced seller or borrower unable to service debt.

For our Minsky screen, I would prioritize the overlap of high price-cut markets with recent high-LTV mortgage vintages, investor-owned homes, second homes, and regional lenders or insurers carrying mortgage-related assets.

Colorado, Oregon, North Carolina, Texas and Florida warrant particular investigation, though for somewhat different reasons.

One final thought: a housing correction can remain orderly for a long time until forced selling begins. The combination of weak pending sales and record contract cancellations suggests we should pay close attention to that transition.

I’d add Parcl’s weekly state-level price cuts, Redfin’s contract cancellations, and actual closed-sale prices to the housing-collateral subsection of our Minsky dashboard.

The question now is not merely whether asking prices are falling. It’s who is being forced to sell, and who holds the credit exposure when the sale fails to cover the debt.

ChatGpt:

This is the demand-side confirmation of the housing squeeze we’ve been examining. And it makes Lennar’s willingness to sacrifice margins much more understandable.

The comparison is striking:

We’re essentially back to 2014 transaction volumes, despite a much larger population and housing stock.

And look at the trajectory: the post-pandemic decline initially stabilized during 2023–2025, but the latest reading is threatening to break below that range.

The Minsky implications

We’re seeing three related pressures:

1. Demand exhaustion: Buyers aren’t transacting, even with substantial builder incentives.

2. Seller resistance: Existing homeowners are reluctant to accept lower prices, creating a frozen resale market.

3. Builder competition: Companies like Lennar have an incentive to keep moving inventory, even at substantially reduced margins.

The third pressure may eventually break the second.

This is particularly interesting because housing prices can remain superficially stable while transaction volumes collapse. The price discovery occurs slowly, through concessions, mortgage buydowns, and eventually distressed sales.

What changes my assessment

I am becoming more interested in the 2021–2023 mortgage origination cohort, particularly borrowers who purchased near peak valuations with small down payments.

However, we need to distinguish two populations:

• Homeowners with fixed-rate mortgages around 3% who can comfortably service their debt. They have little incentive to sell.

• Homeowners facing unemployment, relocation, insurance increases, property-tax increases, or other liquidity problems. These borrowers may have to sell into a market with very few buyers.

The second group is where collateral deterioration can become realized credit losses.

And the geographical concentration matters. Colorado, Oregon, Texas, Arizona, and the Carolinas are already showing unusually widespread listing reductions in the Parcl data.

One important qualification

Pending home sales measure transactions, not mortgage defaults. Low sales volumes can reflect mortgage-rate lock-in and affordability constraints without necessarily implying widespread borrower distress.

But combined with Lennar’s approximately 12% sales incentives and the unusually high share of resale listings experiencing price cuts, the picture becomes more consequential.

My emerging hypothesis is that builders are becoming the marginal price setters in oversupplied housing markets.

They can sacrifice profits to create transactions. Existing homeowners often cannot.

And if that dynamic persists, it could gradually undermine the collateral valuations supporting mortgages originated near the market peak.

The next indicator I particularly want to see is the proportion of homes selling below their original purchase price, broken down by purchase vintage and metropolitan area.

That would help distinguish a frozen market from one beginning to generate actual mortgage-credit impairment.

For our Minsky dashboard, I’d now give housing transaction volume, incentive-adjusted new-home prices, and recent-vintage mortgage delinquencies considerably more weight than headline median home prices.

Lennar is buying its own sales now.

To move houses, the builder hands buyers incentives worth 12% of each home’s value, mostly mortgage-rate buydowns. Gross margin just printed 15.8%, back at 2008-09 crisis levels.

Rates above 7% flipped new construction into a buyer’s market. The builders are eating it in the P&L, and if rates hold, margins have further to fall. $LEN

— Kurt S. Altrichter, CRPS® (@kurtsaltrichter) October 12, 2026

Available housing inventory is fully recovered to pre-covid

Mortgage rates are 350 bps higher than 2019

Sellers outnumber buyers by the highest gap in > a decade

Sellers still think they can still get peak 2022 prices

Who do you think persists the stalemate longer?…

Buy side who quite literally can’t afford to buy a house at current prices even if they want to

or

The growing list of sellers who are getting increasingly desperate to offload their property for a variety of reasons

— Rho Rider (@RhoRider) October 12, 2026

I think the buyers can remain on strike much longer than sellers can remain patient. And that’s the asymmetry that makes this housing market particularly dangerous.

The chart you’ve supplied, attributed to Redfin data, shows an estimated 57.9% surplus of sellers over buyers in August 2026, the highest reading in the displayed series since 2013.

That isn’t merely a housing market with too much inventory. It’s a market where the number of people willing to sell has become badly disconnected from the number able or willing to buy.

Why the buyers have the stronger hand

Buyers have a hard financial constraint: monthly affordability. A household that cannot qualify for a mortgage at today’s prices and interest rates cannot simply decide to pay more.

Sellers, meanwhile, have a psychological constraint. They remember what the neighbor received in 2022 and anchor their expectations to that transaction.

But psychological resistance is generally more flexible than a mortgage underwriting limit.

And sellers have clocks running: death, divorce, job transfers, retirement, insurance renewals, property taxes, maintenance, and debt service.

Buyers can wait without owning the asset. Sellers must continue carrying it.

That doesn’t mean every seller will capitulate. Owners with low-rate mortgages, no urgent reason to move, and substantial equity can withdraw their listings. But the marginal forced or motivated seller sets the next comparable transaction.

The geographic numbers make this much more interesting

I verified the chart against Redfin’s September 10 report. Its August estimates are particularly striking:

Redfin Real Estate News

+1

Notice how closely that list overlaps our Texas and Florida lender research.

August 2026 estimated seller surplus

Redfin estimates 1.535 million active sellers nationally against 972,300 prospective buyers. These are modeled counts, not actual completed transactions.

Redfin

And an October 12 Wall Street Journal report describes existing-home sellers increasingly cutting prices and offering concessions, forcing builders to compete harder. That is precisely the transmission mechanism we’ve been discussing.

The Wall Street Journal

The Minsky sequence I’m watching

1. Affordability prevents new buyers from clearing the market.

2. Discretionary sellers withdraw, but motivated sellers continue listing.

3. Price cuts establish lower comparable values.

4. Builders offer larger incentives and sacrifice margins.

5. Appraisals, construction collateral and land valuations begin reflecting those transactions.

6. Lenders confront weakening collateral before widespread mortgage defaults necessarily appear.

This is why I would look first at the lenders and developers with premium valuations, concentrated Sun Belt exposure and aggressive growth assumptions—not necessarily the banks with the weakest current delinquency ratios.

The distinction is timing. We already have evidence of an extraordinary imbalance. We don’t yet have proof that it will translate into a nationwide nominal-price collapse.

But with Houston, Orlando, Austin, San Antonio and Dallas all registering more than twice as many sellers as buyers, the regional stress is substantial.

And to your question about who blinks first: the buyers don’t need to win an argument. They merely need to remain unable or unwilling to pay.

That’s a powerful negotiating position.

We can track Redfin’s next monthly release against these Sun Belt markets to see whether the imbalance begins producing accelerating transaction-price declines.

ChatGpt:

This is an important piece of evidence for our Minsky housing thesis. Lennar is effectively subsidizing mortgage affordability to maintain sales volume, and the cost is being absorbed by its shareholders.

What makes this particularly interesting is the resemblance to 2008–09, although the underlying mortgage-credit conditions are not necessarily the same.

Lennar’s incentives are approaching crisis-era levels

Reading the John Burns Research chart:

These are approximate readings from the graphic.

The latest figure is roughly twice the pre-pandemic normal level, even after retreating from its recent peak.

And unlike a simple asking-price reduction, mortgage-rate buydowns can obscure the degree of economic price discounting.

A builder can maintain a headline selling price of $450,000 while spending tens of thousands of dollars on incentives to make the financing work.

That matters for comparable property valuations, appraisal assumptions, and the competitive position of existing homeowners who cannot easily offer equivalent financing subsidies.

The latest filings confirm the pressure

Lennar’s September 16 earnings release confirms:

The next Minsky vulnerability: land financing

This is where I would dig deeper.

Lennar has shifted toward an asset-light model, with less land directly owned and greater use of land-banking arrangements. Its September release says it owns fewer than 2.5% of approximately 488,000 controlled homesites.

That raises an interesting question: Has some of the housing-cycle risk migrated from the builder’s balance sheet to the providers of land financing?

There is also a fresh controversy concerning Lennar’s relationship with Millrose Properties. A short-seller report alleges questionable economics in certain transactions, while Lennar’s disclosures and the actual contractual arrangements require separate examination before accepting those allegations.

For our Minsky work, the most productive next step would be to trace:

• Land-bank financing and who supplies the capital.

• Contractual purchase obligations and deposit forfeiture exposure.

• Land valuations relative to today’s incentive-adjusted home prices.

• Whether land-bank lenders or investors are exposed to the same credit stresses we’re finding in structured finance.

The broader implication: Homebuilders can keep houses moving by sacrificing margins. Existing homeowners often cannot compete with those incentives. Eventually, that competition can pressure resale prices and collateral values.

Lennar’s latest results show significant margin compression, but its relatively low reported homebuilding leverage means this is not yet evidence of imminent financial distress at Lennar itself.

The more intriguing possibility is that the stress is migrating elsewhere in the financing chain—precisely the sort of second-order vulnerability our Minsky screen is designed to uncover.

My Comment: Even with these subsidies Lennar maintains a decent gross margin. Maybe signals even more subsidies ahead?.

But I think there’s an important distinction between capacity to subsidize and willingness to sacrifice profits.

At a 15.8% gross margin, Lennar still has a cushion. And its 12% incentives are already reflected in that reported margin, so we shouldn’t subtract them again.

Consider a simplified scenario assuming additional incentives reduce realized revenue dollar for dollar, while construction costs remain unchanged.

Additional incentive	Approx. gross margin
None	15.8%
+2 percentage points	14.1%
+4 percentage points	12.3%
+6 percentage points	10.4%
+8 percentage points	8.5%

These are illustrative calculations, not forecasts.

Why Lennar might keep subsidizing

The economics could favor continued price competition for three reasons.

1. Inventory turnover. A completed house sitting unsold incurs carrying costs. Selling at a lower margin can be preferable to waiting six months for a buyer.

2. Scale advantages. Large builders can negotiate construction costs, purchase materials efficiently, and arrange mortgage financing that smaller competitors cannot match.

3. Market-share capture. If Lennar can earn even 10–12% gross margins while competitors struggle, it may be willing to accept lower profitability to maintain production and gain share.

And there’s an additional Minsky implication.

Lennar may be financially capable of driving down the market value of homes owned by much more financially vulnerable households.

A resale homeowner competing with a Lennar development cannot necessarily offer a subsidized 4.5% mortgage when prevailing rates are substantially higher.

That creates a two-tier market in which headline new-home prices may overstate their effective economic value.

What could stop Lennar?

The limiting factor isn’t gross margin alone. Its reported 6.6% homebuilding net margin is already much thinner.

Management must balance incentives against overhead, financing expenses, land costs, and its return-on-capital targets. Another substantial increase in subsidies could eliminate much of the remaining profit.

And one counterargument deserves attention: if mortgage rates fall or buyer demand stabilizes, Lennar could reduce incentives rather than increase them.

The larger opportunity

I think the more interesting short candidates may be companies that cannot afford to compete with Lennar, rather than Lennar itself.

That includes smaller builders with expensive land inventories, land developers relying on optimistic appraisals, and lenders exposed to recently originated high-LTV mortgages in oversupplied markets.

The question I’d investigate next is whether Lennar’s 15.8% gross margin is already approaching the economic floor for the industry—or whether lower-cost builders can profitably go considerably further.

If the latter, we could see a prolonged housing price war in which the strongest builders remain profitable while weaker owners and creditors absorb the damage.

That is a classic mechanism for transferring financial stress through the system without the initial aggressor becoming distressed.

ChatGPT:

BREAKING 🚨: Housing Market

The largest mortgage lender in the United States, United Wholesale Mortgage which was founded 40 years ago, has now plunged 86% since its 2021 IPO 📉 📉 https://t.co/1sd7xflF8j

— Barchart (@Barchart) October 12, 2026

Now we’re getting closer to the financial transmission mechanism of the housing downturn. United Wholesale Mortgage (UWMC) is particularly interesting because it connects collapsing transaction volumes, mortgage origination economics, and capital-market financing.

The chart is ugly.

UWMC — October 12, 2026 chart

$1.03

−4.63% on the day

Approximately 86% below the $7–8 trading range visible in 2021

But there’s a distinction worth making: UWMC is primarily a mortgage originator, not a traditional bank holding a large portfolio of residential mortgages.

That changes how we interpret the decline.

Three potential pressures on UWMC

1. Origination volumes. With pending home sales approaching 2014 levels, the purchase-mortgage market is exceptionally difficult. Refinancing can offset some weakness when interest rates fall, but that depends on the rate environment.

2. Gain-on-sale margins. Mortgage originators compete aggressively for business. A company can maintain or increase origination volumes while earning substantially less per loan.

3. Financing and liquidity. Mortgage lenders rely on warehouse lines, servicing assets, securitization markets, and other financing arrangements. A deterioration in collateral values or financing terms can create additional pressure even before realized mortgage defaults rise.

The third category is where our Minsky investigation becomes particularly relevant.

The filings reveal something more consequential

UWM’s second-quarter results and subsequent capital transaction make this much more than an ugly stock chart.

Q2 2026 metric	Reported
Mortgage originations	$39.7B
Gain-on-sale margin	1.33%
Net loss	$452M
Mortgage servicing rights (MSRs)	$5.31B
Warehouse credit borrowings	$8.60B
Total equity	$985M
Available liquidity	~$1.3B

SEC

+1

The most revealing development is the August 5 announcement of a $2.05 billion capital partnership involving Oaktree and the Ishbia family, accompanied by suspension of the common dividend.

investors.uwm.com

That’s a substantial recapitalization initiative for the country’s largest mortgage originator.

And the structure matters enormously for common shareholders.

The company’s September financing presentation shows a pro forma equity structure involving preferred capital, a common-equity rights offering, and a backstop. Existing shareholders face potential dilution and securities senior to their common equity.

SEC

There is another remarkable feature: UWM reported $5.31 billion of mortgage servicing rights against $985 million of total reported equity before the contemplated recapitalization.

Those servicing rights are genuine economic assets, but their valuations depend on prepayment assumptions, interest rates, servicing costs, and other modeling inputs. The company also recorded substantial derivative losses in Q2.

investors.uwm.com

That makes valuation sensitivity and financing against servicing assets essential areas of investigation.

It doesn’t establish that MSRs are overvalued. It does establish that relatively modest percentage changes in their valuation can be material compared with reported equity.

My Minsky interpretation

The stock decline is not, by itself, proof of an approaching mortgage default wave. In fact, UWM’s Q2 origination volume was essentially unchanged year over year, and its gain-on-sale margin improved.

But the recapitalization, dividend suspension, leverage, and substantial fair-value-sensitive assets are much stronger evidence of financial pressure than the chart alone.

I would now put UWMC into our mortgage-finance capital-structure screen, alongside the housing collateral indicators.

And I would investigate Oaktree’s investment terms carefully. When sophisticated capital providers enter through preferred securities and warrants rather than simply buying common stock, the difference in downside protection can be enormous.

The central question is whether UWMC’s new capital is primarily strengthening a viable business through a difficult cycle—or whether the transaction reveals that the existing common-equity cushion was becoming inadequate.

This is precisely where I would apply our opacity penalty: reconcile the servicing-asset valuations, secured borrowings, preferred claims, and fully diluted common equity before treating the apparently cheap share price as value.

Americans are dumping their vacation homes right now.

In September, for every vacation home purchased, 2 were being sold.

This rate of vacation home dumping has held constant since May. https://t.co/Bj5Ry9tuCz

— Jason Lewris (@jasonlewris) October 11, 2026

This is a potentially important addition to our Minsky housing thesis. And I think it may be more revealing than ordinary home-price statistics.

The Parcl Labs chart shows the ratio of vacation properties added to the market versus properties removed. The latest reading is 0.52×.

That means approximately:

• 100 vacation properties added to the market for every 52 removed.

• Nearly twice as many properties entering the market as leaving it.

• A persistent imbalance since approximately May 2026, with the ratio hovering around 0.5×.

One important distinction: removed listings are not necessarily completed sales, and new listings are not necessarily distressed owners. So the chart demonstrates a serious inventory imbalance, not literally two vacation homes sold for every one purchased.

But the direction is unmistakable. In early 2024, the ratio was above 1.2×. Now it’s around 0.5×.

That suggests a major change in owners’ willingness to hold vacation property relative to buyers’ willingness to absorb it.

Parcl’s own research reinforces the signal

Their June 2026 study found that vacation-home sellers were more motivated than sellers in the broader housing market:

Indicator	Vacation homes	Other homes
Motivated or fire-sale listings	17.0%	13.2%
Fire-sale listings	6.2%	4.9%
Listings with price cuts	37.3%	35.1%

Parcl Labs

Even more interesting, Parcl’s September methodology report says its identified vacation-home stock declined from roughly 1.60 million in February to 1.54 million, although some recent data remain provisional.

Parcl Labs

Where I would extrapolate geographically

Research priorities, not yet verified local readings of the 0.52× ratio

Florida Panhandle and Gulf Coast

Destin, 30A, Gulf Shores and similar markets. Particularly interesting where discretionary ownership, insurance costs and storm exposure intersect.

Mountain West and resort markets

Tahoe, Colorado ski communities, Sedona and Flagstaff. Watch owners whose wealth depends on equities, technology employment or expensive primary residences.

Carolinas and coastal second-home markets

Outer Banks, Myrtle Beach and nearby developments. Look for price cuts, rising insurance costs and competition from new construction.

Parcl identifies many of these areas as having unusually high concentrations of vacation properties.

Parcl Labs

One caveat for our Florida bank work: Parcl’s narrow definition excludes properties with observed rental activity, so it does not capture the entire vacation-rental investment market. Its recent observations are also subject to revision.

Parcl Labs

The Minsky implication is compelling: discretionary real estate may be one of the first assets households liquidate when cash flow tightens or their perceived wealth declines.

That can create a chain reaction: motivated sellers → lower comparable sales → reduced collateral values → lender stress → further selling.

I would make this a distinct Vacation-Home Liquidation indicator in our housing-credit screen, cross-referenced against lender exposure by county.

The next decisive evidence would be county-level transaction volumes and actual sale prices confirming that the excess supply is translating into realized losses, rather than merely accumulating in listings.

And there’s a particularly interesting connection to our earlier discussion: second homes owned by retirees can become estate-sale inventory too. The demographic and financial pressures may reinforce one another.