Mortgage Rates and Affordability
Mortgage rates have climbed back to approximately 6.8%, making homeownership financially burdensome for many. Home prices have surged nearly 43% since the pandemic, leading to monthly costs that often exceed 35% of a buyer’s income . This has resulted in a decline in first-time homebuyers, whose median age has risen to 38, the highest on record, and their share of total home purchases has dropped to a record low of 24%
Inventory and Regional Variations
National housing inventory remains about 16% below pre-pandemic levels, largely because homeowners with locked-in low mortgage rates are reluctant to sell . However, there is a regional divide.
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Northeast and Midwest: Limited housing supply has led to rising prices and increased competition among buyers
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South (e.g., Texas and Florida): An oversupply of newly built homes and slowing relocation trends have resulted in falling or flat
Market Outlook
Experts suggest that the housing market may remain subdued through 2025, with home price growth expected to be modest, around 2.5% to 4% . The recovery of the U.S. residential construction market is likely to be delayed due to persistently high interest rates and inflation
Navigating the Market
Given the current market conditions, prospective buyers are advised to:
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Consider Long-Term Plans: Evaluate whether purchasing a home aligns with long-term financial and personal goals.
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Negotiate Vigorously: With more sellers lowering prices or offering concessions, there may be opportunities for better deals.
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Explore Mortgage Options: Look into assumable loans with lower rates or adjustable-rate mortgages (ARMs), keeping in mind the potential risks associated with rate increases.
