Will the housing slump ever end?

Probably not until mortgage rates come down

Illustration of a home, house key, housing market charts and money
The supply of homes for sale is "historically low" while the prices have hit "record highs."
(Image credit: Illustration by Stephen Kelly / Getty Images)

The post-pandemic housing slump isn't going away. "Home shoppers came into 2024 with optimism," said The Associated Press. But mortgage rates remain high and are expected to stay that way after "stronger-than-expected data on inflation" cast a pall on the likelihood that the Federal Reserve will lower interest rates. But it's not just the costs of a mortgage that are a problem: The supply of homes for sale is "historically low" while the prices have hit "record highs." Buyers can't buy. Sellers won't sell. Nobody's happy.

That combination of factors means the housing market is "poised to become a major drag on the economy heading into the election," said Politico. Home sales typically make up nearly a fifth of the economy, so the bad times can have major effects. "Home sales activity is at a 30-year low," said one economist. That means "all of the economic activity associated with home sales is at a depressed level." And it's not clear what it will take to shake the sector out of its funk. Said one industry analyst: "It could take a decade."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up
Joel Mathis, The Week US

Joel Mathis is a writer with 30 years of newspaper and online journalism experience. His work also regularly appears in National Geographic and The Kansas City Star. His awards include best online commentary at the Online News Association and (twice) at the City and Regional Magazine Association.