PLANO, Texas--After more than a decade of outsized home-price gains, the U.S. housing market is entering a period of recalibration—one that could test credit unions’ mortgage portfolios but stop short of a full-blown housing recession, according to one economist tracking the sector.
Brian Turner, president and chief economist at Meridian Economics, said home values are likely to face a 5% to 10% correction following years of double-digit appreciation that far outpaced inflation. The shift is already underway, Turner said, noting that prices have begun to soften over the past four months as affordability pressures intensify.
“Average home prices in the U.S. now exceed $425,000 at the same time that mortgage rates average over 6.40%,” Turner said, calling the combination a “double whammy” for buyers—particularly first-time homeowners.
Those pressures are increasingly visible in credit performance. Turner said mortgage delinquencies have been rising steadily for the past three years, a trend credit unions should not ignore as the market cools. The most vulnerable segment, he said, consists of mortgages originated between 2021 and 2023, when prices accelerated rapidly and rates climbed to cycle highs.
“These loans represent the most exposure to portfolio loan-to-value ratios and collateral values,” Turner said.
Still, Turner said credit unions are better positioned than many other lenders because mortgage originations during that period were relatively moderate. As a result, portfolio-level exposure to widespread defaults may be limited.
Looking ahead, Turner said the next six to nine months will be critical for credit unions’ mortgage strategies. He urged institutions to closely monitor underwriting and credit-mitigation standards, particularly for loans they plan to hold in portfolio. Turner said at least 87% of new portfolio mortgage originations through next summer should average a B+ FICO score or higher to manage risk effectively.
While Turner expects further price adjustments, he pushed back on the idea that housing is headed for a deeper downturn.
“Is the housing market primed for a correction? Yes,” Turner said. “Does the risk translate into a housing recession? Very doubtful.”
That view contrasts somewhat with the assessment from America’s Credit Unions Chief Economist Curt Long, who has described housing as already being in recession due to weak sales, declining construction, and stagnant employment in homebuilding. Long has pointed to persistently high prices and mortgage rates as structural headwinds entering 2026.