South Florida’s housing market is diverging sharply in 2026, according to economist Matthew Gardner’s second-quarter update. Single-family properties—especially at the high end—continue to attract cash-rich and international buyers, while condos and townhomes face pressure from assessments, insurance costs and financing challenges. Nationally, however, the market is showing surprising resilience despite elevated mortgage rates.
Key takeaways
- South Florida’s single-family market remains comparatively strong, while condos and townhomes continue to weaken.
- The federal housing law could help manufactured housing, but its effect on overall affordability may be limited.
- Persistent inflation could keep mortgage rates elevated through the remainder of 2026.
- National inventory remains below pre-pandemic levels, even as sales and prices improve.
Federal housing law offers targeted benefits
The 21st Century ROAD to Housing Act includes provisions aimed at institutional investors, manufactured housing and regulatory reform. Gardner said the restrictions on large-scale property ownership may have limited influence because institutional buyers are only one factor in the broader housing shortage. Build-to-rent exemptions could also allow many operators to continue with relatively few changes.
The more immediate benefit may come from manufactured and modular housing reforms. Removing the permanent-chassis requirement could reduce construction costs by an estimated $5,000 to $10,000 per unit and help traditional lenders treat these properties more like homes than personal property. That could improve financing for retirees, rural households and first-time buyers.
The law also streamlines federal permitting and offers incentives for zoning changes. However, local governments retain control over zoning and building codes, limiting the legislation’s ability to create new supply quickly.
Inflation remains the biggest housing risk
Gardner identified inflation as the development most likely to have a lasting impact on housing. Geopolitical tensions have pushed up energy and material costs, while higher inflation pressures bond yields and can keep mortgage rates elevated. Because the 10-year Treasury yield influences 30-year mortgage pricing, persistent inflation can affect borrowers even when the Federal Reserve is not actively raising rates.
Builders face a related challenge: higher labor and material costs can make new homes too expensive for the market to absorb. Homeowners are also dealing with rising insurance premiums, property taxes and maintenance expenses, which may discourage moves and upgrades.
Fed policy keeps borrowing costs under pressure
The Federal Reserve’s more hawkish stance has dashed expectations for near-term rate relief. Rather than cutting rates aggressively, policymakers have emphasized price stability and a cautious approach to future decisions. Gardner expects mortgage-rate headwinds to continue through the second half of 2026, with meaningful cuts unlikely until 2027.
For buyers, that means affordability will remain constrained even if housing legislation encourages more construction. Sellers, meanwhile, may need to account for a smaller pool of rate-sensitive purchasers.
South Florida tells two different stories
The region’s single-family market continues to benefit from cash-heavy buyers, high-net-worth domestic relocations and international capital from Latin America and Europe. Those forces are supporting price appreciation, particularly in higher-end neighborhoods, where sellers may still have negotiating power.
Condos and townhomes are experiencing a different reality. Buyers are increasingly focused on association finances, reserve studies and potential special assessments before making offers. Sellers in this segment may need more cautious pricing and greater transparency about building obligations.
National market shows resilience
Despite high mortgage rates, national monthly sales have increased for three consecutive months, and prices have risen each month of 2026 so far. Inventory has improved but remains 19% below June 2019 levels, according to Gardner.
The figures suggest a market that is constrained rather than collapsing. The outlook for the rest of the year will depend heavily on inflation, federal policy and whether geopolitical tensions ease.