That’s because the mortgage rate of people who already own is historically low. Bank of America doesn’t think that gap will shrink much for years. In 2022, amid multiple warning signs, many economists sounded the alarm about an inevitable 2023 recession. The rise in mortgage interest rates is due, in part, to the efforts of the Federal Reserve to tamp down inflation, which began surging in 2021 and hit a 40-year high of over 9% in June 2022. Conversely, by late 2009, nearly a quarter of U.S. homeowners were underwater, or had negative equity, in their homes, meaning they owed more on their mortgages floor trader’s method than what they were worth. Meanwhile, rent growth has held steady at a reasonable pace, and the share of rental listings on Zillow offering a concession — such as free weeks of rent or free parking — is at a record high.
In addition, homeowners have been reluctant to put their properties on the market and risk potentially forfeiting the ultra-low mortgage rates they locked in during the pandemic. Sales were especially strong in the Northeast and Midwest, which currently offer markets that are more affordable compared to other regions. Beyond this latest data, Yun predicts an even rosier future for the housing market as home atfx trading platform price growth continues to decelerate.
“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said Yun in the report. Builder sentiment seems to be back on an upward trajectory—at least for now. Thanks to inflation and mortgage rates easing and builders seeing more of this to come, the outlook for new construction is showing tentative signs of improvement. “The record low supply How to buy aave of houses on the market protects against a market crash,” says Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, a nonqualified mortgage lender. Perhaps more indicative of weakening price growth, monthly prices receded 0.13%.
A housing bubble is on everyone’s mind right now — here’s what it is and how to know if the US is in one
- However, Chodorow-Reich says, their paper can help us think about it.
- But if you’re trying to predict what might happen in 2025, experts say this is probably not the best home-buying strategy.
- The housing market is in a much healthier place than it was in 2008 and while the U.S. may face an economic downturn, lending has tightened considerably.
- This communication is not intended as an offer or solicitation for the purchase or sale of any financial instrument.
And they have risen at signs the Fed could keep rates on hold, such as inflation remaining stubborn. Lenders began foreclosures on 19,763 properties nationwide in September, down 5% from the previous month and 21% from a year ago, according to real estate data firm Attom. Completed foreclosures also decreased, with real estate-owned properties, or REOs, dropping by 9% compared to the previous month and down 21% from a year ago. REOs are homes that didn’t sell at foreclosure auctions, with mortgage lenders ultimately taking possession. Following a 2.5% monthly decline in August, monthly existing home sales receded 1% in September, according to the latest report from NAR. This puts the seasonally adjusted annual sales rate at 3.84 million in September, the lowest annualized rate of activity since 2010.
Will the Housing Market Be More Balanced in 2025?
With record-high home prices still trending upward in many markets, you may be concerned that we’re in a bubble that’s prime to pop, as it did in the 2008 financial crisis. However, the likelihood of a housing market crash (a rapid drop in unsustainably high home prices due to waning demand) remains low as we look ahead to 2025. Yet, even with the slowing pace, the index still managed to eke out another record high, indicating that home prices likely remain out of reach for many would-be buyers.
The housing market is ‘stuck’ until at least 2026, Bank of America warns
Making sure your finances are in a good place can help you snag the best mortgage rate possible, no matter how average rates are trending. But if there was a real reason for prices to soar in these places, then why did these places see a bubble and crash? To explain this, Chodorow-Reich and his colleagues resurrect a theory of a long-dead economist, Charles Kindleberger. Even while home prices were dropping a bit year-over-year, a lack of inventory and a strong jobs market helped keep values relatively high. Here are some expert tips to increase your chances for an optimal outcome in this tight housing market. Sharga explains that a significant factor contributing to today’s comparatively low levels of foreclosure activity is that homeowners—including those in foreclosure—possess an unprecedented amount of home equity.
These forecasts could change if the economy shows signs of weakening. Unemployment has ticked up slightly from last year, but remains relatively low. In September, the unemployment rate inched down to 4.1% from the month before.