Between 2018 and 2023, nearly 34 million Americans packed up and crossed a state line. In 2023 alone, 6.7 million did just that, and over the course of a single year, the population of a mid-sized country picked up its income, its tax base, and its buying power and set it down somewhere new. So monumental are these numbers that they give the impression of constance, inevitability; most importantly, they give the impression of a trend that’s here to stay. That is just the mistake I want to write about. Because two of the forces that have defined the housing market over the past decade (the great flow of people into the Sun Belt, and the memory of extraordinarily cheap money) are reversing at the same time. The market spent years treating each force as permanent, when in reality, both were fleeting.

The real question worth asking perhaps, is, how much of what we believe about housing is built on conditions that have already started to diminish?

The great interstate migration

Where did all these people go? A great many went to Florida, which posted one of the highest rates of net in-migration in the country, as Americans chased warmth and a lower cost of living. But if we look closely at where people actually went, the pattern shows how many people moved toward states with abundant housing supply and lighter tax burdens. It wasn’t just the sun they were chasing, but the room to live and money to keep.

For a while, this produced a virtuous circle. People arrived, demand rose, builders built, and the arithmetic of growth seemed to justify itself. And here is where the trouble began, because a wave of arrivals is a trend, not a constant. Every trend gathers speed, levels off, and eventually pulls back. Yet those drafting business strategies in 2021 and 2022 overlooked the inevitable leveling-off, projecting endless linear growth from a temporary curve. The real hazard was never the shift in population itself; rather, it was the premise that relocation would persist at that peak speed indefinitely. Unfortunately for them, it did not.

Has building outpaced the movers?

Housing has always been a business of unforgiving margins, and the industry forgets that fact at its peril. The vacancy rate for single-family homes normally holds between 1% and 2%, and even at the worst of the last housing crisis it climbed only to around 2.8%, which tells you that the line separating a healthy market from a glutted one is drawn in fractions of a single percentage point, a line that brings the correction fast once it is crossed.

That correction has already arrived across much of the country, where housing starts in 2025 slipped below the year before, builder confidence sank to 36 by early 2026, and builders from Fresno to Charleston, San Antonio, Las Vegas, Austin, Phoenix and Dallas resorted to price cuts and incentives to clear homes they had built for a wave of arrivals that was already receding.

It would be easy, and wrong, to call the builders reckless, because they were reading the signal in front of them and the signal was real enough; their mistake was to treat a passing moment as a permanent condition. Now the reckoning plays out the only way it can, with a market that overbuilt for yesterday’s demand grinding its way back toward balance, one discounted house at a time.

The mortgage rate illusion

And then there is the money, the most stubborn illusion of all. Ask almost any buyer why they are sitting on the sidelines and they say rates are simply too high, but compared to what? Today’s mortgage rates are broadly in line with their long-run historical norm, and they feel punishing only against the pandemic era, when money fell to levels that were, by any honest reading, an aberration that rewired an entire generation’s sense of normal.

When rates hit their recent peak of 7.62% in the autumn of 2023 they priced millions of households out of a median-priced home, and a decline of well under a point since then has ushered a few million back in, which means the buyer holding out for a return to 3% is not being prudent, but rather anchored to a number unlikely to return. That is the very error the overbuilt subdivisions and the frozen buyers share, one committed by producers and the other by consumers, both of them mistaking an exceptional moment for a permanent order of things.

The movers slowed and the cheap money vanished, and the sooner we accept that both were the exception rather than the rule, the sooner this market finds its feet again.