What's happened
The US housing market shows signs of stagnation with record-low home turnover rates, rising mortgage rates, and declining homeownership. Fewer homes are changing hands, and buyer activity remains subdued amid economic uncertainty and high prices, impacting affordability and mobility.
What's behind the headline?
The US housing market is entering a period of significant stagnation, driven by a combination of high mortgage rates and economic uncertainty. The record-low home turnover rate of 28 per 1,000 homes signals that homeowners are staying put longer, reducing market fluidity. This reluctance is compounded by the fact that many homeowners hold low-interest mortgages from 2020-2021, making it financially unattractive to sell and buy at current rates. The decline in homeownership, now at 86.19 million, marks the first drop in nearly a decade, highlighting how high borrowing costs and soaring prices have priced out many potential buyers. Meanwhile, the median age of homebuyers has increased to 59, with first-time buyers at a historic low of 21%. Despite some easing in mortgage rates, which recently fell to 6.17%, affordability remains a barrier, especially as home prices have risen 53% over six years. The slowdown is also reflected in the shrinking number of homes sold, with the lowest turnover rates since the 1990s, particularly in major markets like New York, Los Angeles, and San Francisco. This persistent stagnation suggests that the US housing market will continue to struggle with low activity levels, impacting overall economic mobility and wealth accumulation. The outlook indicates that unless mortgage rates decline further or home prices stabilize, the market will remain subdued, with limited opportunities for new buyers and sellers alike.
What the papers say
The analysis draws from multiple sources, including the NY Post, Business Insider UK, The Independent, and AP News, all highlighting the ongoing slowdown in US housing activity. The NY Post emphasizes the rising median age of homebuyers and record-low first-time buyer participation, while Business Insider UK and The Independent focus on the historic lows in home turnover rates and the broader economic factors constraining mobility. AP News echoes these points, noting the decline in homeownership and the reluctance of homeowners to sell due to existing low-interest mortgages. The consensus across these outlets underscores a market in prolonged stagnation, driven by high mortgage rates, economic uncertainty, and high home prices, with little immediate relief expected.
How we got here
Since 2022, rising mortgage rates and high home prices have suppressed US home sales and ownership. The market has been in a slump, with fewer homes changing hands and many homeowners reluctant to sell due to low interest rates on existing mortgages. The decline in turnover rates reflects broader economic challenges, including a slowing job market and high inflation, which have constrained mobility and affordability.
Go deeper
Common question
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