The housing market is having a tough time right now. Not many people are buying homes – only 3.84 million homes were sold last month. This is the lowest number since 2010.
Why? Three big reasons:
- Banks want a lot of money to lend (7% interest)
- There aren't many homes for sale (only 1.39 million)
- We need 3.7 million more homes for everyone who wants one
Even with these problems, home prices keep going up. The average home now costs $434,271. That's 5% more than last year.
Some parts of the country see bigger price jumps than others. The middle part of the country, near the Great Lakes, has the biggest price increases.
These facts help us see what's really going on when people try to buy or sell homes today.
Current Housing Market Overview
The housing market today is both exciting and challenging for many people. Houses keep getting more expensive, making it harder for folks to buy homes. Last month, the average home in America cost $434,271.
Some parts of the country saw bigger price jumps than others. The East North Central area had the biggest increase. Houses are selling fast – most find a buyer in just 15 days.
Home prices went up 5.1% from last year, but this change wasn't the same everywhere. Some places saw bigger increases while others stayed close to the same.
This means buying a home is getting harder for many people, but those who already own homes are seeing their value grow.
Supply and Demand Imbalance
The housing market has too few homes for all the people who want to buy them. More homes are for sale now than last year, but it's still not enough.
Think of it like having only 4 cookies when you need 6 to share with friends.
Houses cost more than ever before – the average home now sells for $407,200. People are buying homes in every part of the country, but we still need many more houses.
Builders are working hard to make new homes, but we're still short by about 3.7 million houses.
This is like having a big family but a small house. Even though workers are building more homes, we still don't have enough for everyone who needs one.
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This makes houses cost more money than they should.
Rising Mortgage Rates Impact
Buying a home is harder for many families right now. The cost to borrow money has gone up a lot. Banks now charge about 7% interest on home loans. This means people have to pay more each month for their homes.
Many folks are waiting to buy homes until prices come down. Sales of both new and old homes dropped in August. In fact, home sales are now at their lowest point since 2010.
Most people who want to buy a home are sitting and watching. They hope the cost to borrow money will go down soon. Until then, many dream homes will have to wait.
Rate Surge Slows Sales
The housing market is having a tough time right now. Not many people are buying homes because it costs too much to borrow money. In September 2024, only 3.84 million homes were sold. This is the lowest since 2010.
Many people who already own homes don't want to sell. They've low rates on their loans and don't want to pay more for a new house. The cost to borrow money is now 6.72%, which is very high.
There aren't enough homes for everyone who wants to buy:
- We need 3.7 million more homes
- It would take 4.3 months to sell all the homes for sale
- The cost to borrow money went up by 0.6%
New home builders are trying to help. They offer deals to get people to buy their houses. They sold 738,000 new homes in September.
But people still find it hard to buy older homes. The big problem is that homes cost too much and loans are too expensive. We also don't have enough homes for all the people who want them.
Payment Affordability Hits Bottom
Buying a home is harder than ever for many families. Mortgage rates went up to 8% last fall, making monthly payments too high for most people. The rates went down a bit to 6.88% by October, but homes still cost too much. Home prices went up by 4.2% from last year.
Fewer people own homes now than last year. Many families who want to buy their first home can't afford it. Small, less costly homes cost even more than big, fancy ones now. This makes it very hard for new buyers to find a home they can pay for.
There aren't enough homes for everyone who wants to buy one. While builders are making new homes, they can't build enough cheap ones fast enough.
We need 3.7 million more homes to help everyone who wants to buy one.
Regional Market Performance Analysis
People are seeing big differences in how homes are selling across America. Many folks are buying homes in the middle states, where prices went up 6.3%.
But fewer people are buying homes in states near the ocean. People are moving away from the West and Northeast, while the South sees both new people moving in and out.
Not many homes are for sale right now. Only 1.39 million homes are up for sale, and we need 3.7 million more.
In the South, more people want to live outside big cities, but there aren't enough homes to rent. Bank loans are a bit cheaper now at 6.24%, but some areas are doing better than others.
The middle states look good for home sales, and more people might buy homes there next year when loans get cheaper.
Demographic Shifts and Buying Trends
People are moving away from big cities on the East and West coasts. More folks want to live in the suburbs now. Many homes are being used – 1.7 million more homes had people living in them from 2023 to 2024. Most of these were rental homes.
Buying your first home is hard right now. Small, starter homes cost much more than they used to. Older people are staying in their homes longer, so there are fewer homes to buy. Banks also want more money to lend you money for a house.
We need more homes. Even though builders made 5.8 million new homes since 2020, we still need 3.7 million more. This makes it hard for young adults who want to buy their first home.
Economic Factors Affecting Housing
The housing market is tough right now for many people. Interest rates for home loans are high – more than 6%. Houses also cost more than last year, up by about 4%. This makes it hard for people to buy homes.
Some good news is that loan rates are going down a bit. But buying a house in 2024 might still be hard.
Not many homes are for sale right now. In fact, we need 3.7 million more homes. This makes it really hard for people who want to buy their first home.
Jobs and pay are getting better in our country. But more people are out of work now, and this hits renters the most.
More people want to buy homes, but there still aren't enough houses to go around.
Future Market Outlook
The housing market will get better slowly until 2025.
When the Fed lowers rates in late 2024, more people will buy and sell homes.
Some areas will do better than others based on local jobs and how many homes are for sale.
Home prices will go up a little bit.
Areas with more jobs will see homes get more costly faster than other places as people move there for work.
Market Recovery Timeline
The housing market is getting better step by step. More people will be able to buy homes in the next few years.
Right now, home loans cost a lot at 6.88%, but they'll get cheaper soon. This will help more people buy houses.
House prices will still go up, but not as fast as before. Next year, they may rise about 3% to 5%.
There are more houses to pick from now than last year. Good news: prices in stores aren't going up as fast, and banks will make it easier to get loans.
But fixing all the housing problems will take time. We still need to build many more homes – about 3.7 million more.
The road to a better housing market will be slow but steady.
Regional Growth Patterns
The housing market looks very different across America this year. More homes are for sale in some areas than others when we compare to before COVID-19.
The South and West have the most new homes for sale. The South saw a big jump of 34% in homes listed. The West was close behind with almost 34% more homes.
The Northeast didn't grow as much. It only saw 14% more homes for sale. The Midwest fell in the middle with about 20% more homes.
San Diego leads all big cities with the most growth in homes for sale.
Home prices keep going up fast in the Northeast. New Jersey and Rhode Island saw big price jumps.
Young buyers, like Millennials and Gen Z, are buying their first homes here and in the Midwest. This rise in first-time buyers shows more people want to own homes in these areas.
Many young families are moving to find places they can afford.
Conclusion
The housing market is in a tough spot right now. There are not enough homes for all the people who want to buy them. For every home that's for sale, three families want to buy it. Houses cost much more than they did a few years ago – almost half as much more. New home buyers find it hard to buy their first home. But people with lots of cash can still buy homes and make money from them.
