Why the housing market is so stuck, in 4 charts
From Yahoo Finance: 2025-06-19 06:00:00
The US housing market is slow despite peak homebuying season. Housing contract activity dropped in April, with more sellers listing properties but prices remaining high. Mortgage rates have held steady at 6.8-7%, pricing out many buyers. Economists expect a 1-2% national price drop, but affordability remains a challenge with high rates.
Home prices have surged, outpacing wage growth. Those with 3% mortgages are reluctant to move with rates near 7%, keeping inventory low. The hope is that as low-rate mortgages become scarcer, the market will ease. But for now, sellers are still feeling pressure to hold onto their low rates.
For-sale inventory is up, but prices aren’t dropping nationwide. Some regions see slowing price appreciation or outright declines. High mortgage rates have reduced buying power significantly. Economists stress the importance of lower rates to revive the market, as many buyers are priced out at current rates.
Buying a home is now much costlier than renting due to rising prices and mortgage rates. Historically, buying a starter home cost $233 more than renting; now, the premium is over $1,000/month. For ownership costs to return to normal, rates need to fall to 3.75%. Federal Reserve Chairman Powell acknowledges market challenges.
The housing market faces a shortage and high rates. Powell believes restoring price stability and creating a strong labor market are crucial. Sign up for the Mind Your Money newsletter for more updates on housing, mortgages, and home insurance. Read the latest financial and business news from Yahoo Finance.