All articles tagged with #housing demand
The housing market shows signs of improvement with declining mortgage rates and slowing home price growth, leading to increased buyer activity and a potential better market for buyers in 2026. However, affordability remains a concern due to high borrowing costs, and economic uncertainties continue to influence buyer confidence and builder activity.
Single-family home rent growth has slowed in July 2025, with a 2.3% increase year-over-year, down from previous rates and below the 10-year average, signaling a potential cooling in the housing rental market amid broader economic struggles and shifting demand across major metropolitan areas.
The housing market is no longer a wealth-building engine as home prices decline and fail to keep pace with inflation, leading to subdued demand, falling sales, and a potential shift towards a more sustainable long-term growth aligned with economic fundamentals.
The Federal Reserve has expressed concern about the weakening housing market, citing declining demand, falling home prices, and sluggish construction activity, which could impact the broader economy and influence future rate decisions.
Goldman Sachs forecasts China's urban housing demand will remain at 75% below its 2017 peak due to declining population and falling prices, with annual demand dropping to around 4.1 million units by 2025-2030, highlighting ongoing struggles in China's property sector.
Demand in the housing market has plummeted, with mortgage applications dropping 39% from 2019 levels, leading to increased housing supply as homes sit longer on the market. Despite mortgage rates stabilizing around 6.9%, high home prices, which surged during the Fed's rate repression in 2020-2022, continue to suppress demand. The collapse in mortgage originations has also impacted the mortgage industry, with significant layoffs. Many potential homebuyers are waiting for prices to fall, incomes to rise, or rates to decrease, keeping the market frozen.
Home sales in October saw a 3.4% increase from September, driven by a drop in mortgage rates, marking the first annual rise in over three years. The National Association of Realtors reported a seasonally adjusted rate of 3.96 million units sold, with inventory increasing by 19.1% from the previous year. Despite higher mortgage rates now at 7.05%, demand remains strong, particularly after the election, as potential buyers re-enter the market. However, first-time buyers and cash purchases have decreased, and inventory remains below pre-Covid levels.
Housing demand has stalled as mortgage rates approach 7%, with the Mortgage Bankers Association reporting a 3.7% increase in mortgage applications driven solely by refinancing. Purchase applications fell 1% compared to the previous week, with supply down 34.3% from pre-pandemic levels. The average rate on a 30-year loan rose to 6.8%, and the Federal Reserve's aggressive tightening campaign has cooled the interest rate-sensitive housing market. Sellers with low pre-pandemic mortgage rates are reluctant to sell, further limiting inventory for potential buyers.
The IMF predicts a 35-55% drop in new housing demand in China over the next decade due to a decline in new urban households and a large inventory of unfinished properties, which could hinder the country's overall growth. China's real estate sector, accounting for a quarter of GDP, has been affected by a government crackdown on developer debt reliance. Despite the IMF's prediction, China's representative to the IMF believes housing demand will remain large, and policy support will gradually kick in. The IMF also expects slower GDP growth of 4.6% this year and notes that moving supply chain production could lower China's GDP growth by about 6%.
Pending home sales in the US dropped 1.5% in October, reaching the lowest level since tracking began in 2001, even worse than during the financial crisis. The decline is attributed to high mortgage rates and a limited supply of homes for sale. While recent decreases in mortgage rates may help qualify more buyers, the low housing inventory continues to prevent housing demand from being fully satisfied. Sales fell in all regions except the Northeast, with the steepest decline in the expensive West. Home prices continue to rise, particularly in the high-end market where supply is relatively higher.
Mortgage rates have dropped to a two-month low, sparking renewed interest in the housing market. The Mortgage Bankers Association's index of mortgage applications rose 3% last week, with the average rate on a 30-year loan falling to 7.41%. The decline in rates has led to increased demand for both home purchases and refinancing. However, despite the recent uptick, application volume remains down compared to the same time last year. The housing market has been impacted by high mortgage rates, limiting inventory and leaving few options for buyers.
Millennials, despite facing challenges in housing affordability, are expected to continue driving housing demand and household formations in the U.S. for the foreseeable future, according to an analysis by Ned Davis Research. With millions of millennials entering prime homebuying age, their demand for housing is helping to support the housing market and keep prices high. However, the housing market is also constrained by a shortage of available homes, with an estimated shortage of 2.1 million housing units. The lock-in effect, where low mortgage rates keep homeowners in their homes longer, further exacerbates the supply shortage. While homeownership is still highest among older age groups, millennials' demand is playing a significant role in the housing market dynamics.
Topeka, Kansas has been ranked as the top emerging housing market in the US, according to the WSJ/Realtor.com Fall 2023 Emerging Housing Markets Index. The city offers lower-cost living, strong employment opportunities, and convenient commutes. Despite being relatively affordable, home prices in Topeka have risen due to high demand, with a typical home listed at $250,000 in September. The top 20 emerging markets on the list are expected to fare better in the slow housing market, with 15 of them having lower prices than the national median.
Mortgage rates in the US have surged to their highest level since 2000, causing a sharp decline in home-purchase applications, which fell to a nearly three-decade low. The Mortgage Bankers Association's index of mortgage applications dropped 6% last week, while the average rate on a 30-year loan climbed to 7.53%. The housing market has cooled rapidly due to the Federal Reserve's tightening campaign, with demand for refinancing also falling. Higher mortgage rates are limiting inventory, as sellers who locked in low rates before the pandemic are reluctant to sell. The total number of homes for sale has tumbled by 9.2% compared to last year, leaving few options for buyers.
Barclays economists suggest that the housing imbalance and shortage in the market can be attributed to the aging baby boomer generation, who are fueling the demand for homes as they age. Contrary to the belief that older consumers would require fewer homes, it turns out that they prefer smaller dwellings but not fewer homes. The larger size of the boomer generation compared to previous generations means that they are using up more houses as they age, leaving less existing inventory for younger generations, particularly millennials. However, the current demand dynamics for housing may not persist in the future as the population in younger age groups is not as large. The housing shortage remains a major challenge for homebuyers, with rising mortgage rates and limited inventory pushing home prices higher.