The US housing industry is experiencing a period of transition marked by persistent affordability challenges, policy reform efforts, and slow but steady growth. According to the latest data, home prices in September stood at a median of $415,200, up just 2.1 percent year over year, indicating a significant slowdown compared to the rapid gains seen during the pandemic. The inventory level rose to 4.6 months, the highest in several years, offering buyers a little more choice and slightly improving their leverage. However, despite an increase in available homes, affordability remains historically low. Mortgage rates as of late October hovered around 6.17 percent, the lowest in over a year but still unaffordable for many first-time buyers, with median households spending about 39 percent of their income on mortgage payments, well above long-term norms.

A notable regulatory development has been the Trump administration’s announcement of a potential 50-year fixed-rate mortgage, with officials arguing that a longer term could boost affordability and unlock the market for younger and first-time buyers. Adjustable-rate mortgages have also seen a surge in popularity, now representing over 10 percent of new applications, the highest level since 2021. These shifts highlight how both policy makers and consumers are seeking alternatives to traditional financing in the face of sustained high prices and borrowing costs.

The industry remains gridlocked, with existing homeowners holding onto homes for a record average of 11 years because they do not want to give up low-interest loans secured before 2022’s rate hikes. According to the National Association of Realtors, this lock-in effect is a primary driver behind the shortage of homes for sale. First-time buyers, burdened by student debt and rising costs, are delaying home purchases, and many now anticipate entering the market in their mid-30s or later.

Market leaders are responding by advocating policy changes and exploring new loan products. The overall expectation among analysts is for modest home price growth of about 2.4 percent in 2025, signaling a move toward sustainability rather than a boom or crash. Compared to previous years, there is a consensus that the market is stabilizing, but affordability pressures and evolving consumer behavior continue to shape the industry’s immediate future.

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This content was created in partnership and with the help of Artificial Intelligence AI