Existing-home sales in the United States have experienced a significant 15% drop in September compared to the previous year, marking the lowest figure in 13 years. This decline has been attributed to various factors, including surging mortgage rates, low inventory levels, and rising home prices.
According to Lawrence Yun, the chief economist at the National Association of Realtors (NAR), limited inventory and affordability issues have been major hurdles for the housing market. Housing inventory has decreased by 8.1% compared to last year, making housing affordability worse than it was during the 2008 financial crisis.
Interestingly, the current state of the housing market mirrors the situation in the 1980s. Just like millennials today, individuals during that time also faced a frozen and unaffordable market, coupled with rising interest rates. Additionally, home sales activity plummeted from 1978 to 1982, reflecting a similar scenario to what we are currently experiencing.
To make matters worse, housing affordability today is even worse than it was in 2006, right before the infamous market crash. Experts suggest that this trend of low affordability is likely to continue, with slow price increases predicted in the coming years.
Another factor contributing to the declining home transactions is the resistance among homeowners to sell their properties. Many fear losing their lower interest rates, which has led to decreased inventory levels and fewer transactions in the market.
These conditions are worrisome for prospective buyers and industry professionals alike. The current state of the housing market highlights the urgent need for reforms and initiatives that aim to make housing more accessible and affordable for all Americans.
As the housing crisis deepens, it becomes increasingly important for policymakers, real estate agents, and the general public to work together to find viable solutions that can address the challenges facing the housing market.
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