The US housing market is 'stuck,' and might remain that way until 2026
Former Federal Reserve Bank of St. Louis President and CEO James Bullard looks ahead to the next rate decision, unpacks jobs data and reacts to Yellen's housing development.
The affordability crisis that has plagued the U.S. housing market for the last three years is unlikely to improve until at least 2026, according to new findings published by Bank of America.
«The U.S. housing market is stuck, and we are not convinced it will become unstuck anytime soon,» Bank of America economists Michael Gapen and Jeseo Park wrote in the Monday note.
They expect home prices to rise 4.5% this year, 5% in 2025 and 0.5% in 2026, before the pandemic's effects on the market finally fade. Until then, the forces that have «reduced affordability, created a lock-in effect for homeowners and limited housing activity» will remain in place.
WHY CAN'T YOU FIND A HOME FOR SALE?
During the COVID-19 pandemic, home prices soared at a pace not seen since the 1970s. Homebuyers – flush with stimulus cash and eager for more space during the pandemic – took advantage of ultra-low mortgage rates and flocked to the suburbs.
Residential homes in Crockett, California, on June 6, 2024. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
Demand was so strong, and inventory so low, that at the height of the market some buyers waived home inspections and appraisals or paid hundreds of thousands over asking price.
The frenzy came to a halt when the Federal Reserve embarked on the most aggressive interest-rate hike campaign since the 1980s as it tried to slow the economy and crush runaway inflation. Higher interest rates helped to push the average rate on 30-year mortgages above 8% for the first time in years.
Those higher mortgage
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