𝐎𝐧𝐞 𝐞𝐜𝐨𝐧𝐨𝐦𝐢𝐬𝐭 𝐩𝐫𝐞𝐝𝐢𝐜𝐭𝐞𝐝 𝐞𝐱𝐚𝐜𝐭𝐥𝐲 𝐡𝐨𝐰 2026 𝐡𝐨𝐮𝐬𝐢𝐧𝐠 𝐰𝐨𝐮𝐥𝐝 𝐩𝐥𝐚𝐲 𝐨𝐮𝐭. 𝐇𝐞𝐫𝐞 𝐢𝐬 𝐰𝐡𝐚𝐭 𝐭𝐡𝐚𝐭 𝐦𝐞𝐚𝐧𝐬 𝐟𝐨𝐫 𝐌𝐞𝐦𝐩𝐡𝐢𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬.

Last March, Bill McBride published a housing outlook on his Calculated Risk Substack newsletter. His thesis: tariffs would spike construction costs, immigration changes would shrink the workforce and housing demand, and policy uncertainty would stall starts and sales.

Thirteen months later, the scorecard is almost perfect.

Construction input prices surged at a 12.6% annualized rate in early 2026 according to Associated Builders and Contractors. New home sales fell 11.3% year over year in January. The National Association of Home Builders estimates tariffs add roughly $10,900 per home. Steel, aluminum, and copper all carry 50% tariffs. The construction industry needs about 500,000 more workers than it has, and 94% of contractors report they cannot fill positions.

For those of us investing in Memphis, the picture is more nuanced than the national headline suggests.

Tennessee is one of nine states where active inventory has climbed above pre-pandemic 2019 levels. That means we are further along in the normalization process than most markets. Median sale prices dipped about 7% year over year in February, though price per square foot actually ticked up. Homes are sitting on the market a bit longer. This is a market returning to normal, not a market in distress.

The real impact for Memphis investors is on the cost side. Renovation budgets need a 10 to 15% buffer for materials right now. Labor is tighter. If you are self-managing and relying on subcontractors for maintenance and turns, you are competing with every other landlord for the same shrinking pool of tradespeople. Operators with in-house maintenance teams have a genuine structural advantage in this environment.

On the demand side, Memphis remains a work and transit market. FedEx, St. Jude, and the university system drive both short-term and long-term rental demand regardless of consumer confidence surveys. That is a fundamentally different setup than vacation or seasonal markets.

One more thing: if you are not already reading Calculated Risk, start. Bill McBride has been writing about housing economics since before the 2008 crash, and his Substack is one of the best sources of unbiased, data-driven housing analysis I have found. He called 2026 a year before consensus caught up.

𝙒𝙝𝙖𝙩 𝙖𝙧𝙚 𝙮𝙤𝙪 𝙨𝙚𝙚𝙞𝙣𝙜 𝙤𝙣 𝙩𝙝𝙚 𝙜𝙧𝙤𝙪𝙣𝙙 𝙞𝙣 𝙮𝙤𝙪𝙧 𝙢𝙖𝙧𝙠𝙚𝙩? 𝘼𝙧𝙚 𝙧𝙚𝙣𝙤𝙫𝙖𝙩𝙞𝙤𝙣 𝙘𝙤𝙨𝙩𝙨 𝙝𝙞𝙩𝙩𝙞𝙣𝙜 𝙮𝙤𝙪𝙧 𝙗𝙪𝙙𝙜𝙚𝙩𝙨 𝙝𝙖𝙧𝙙𝙚𝙧 𝙩𝙝𝙖𝙣 𝙚𝙭𝙥𝙚𝙘𝙩𝙚𝙙?

-- Andrew, Memphis TN