The US housing industry continues to face historic challenges as of the past 48 hours. Home sales turnover has dropped to its lowest in at least 30 years with only 28 out of every 1,000 homes changing hands so far this year, according to a new Redfin analysis. Most buyers and sellers remain on the sidelines, held back by high mortgage rates and poor affordability. Last week, the average 30-year fixed mortgage rate slipped to 6.17 percent, its lowest in over a year, but over 70 percent of existing borrowers have already locked in rates below 5 percent and are reluctant to move, deepening the so-called mortgage rate lock-in effect.
This stalemate means home sales remain stalled at about 4 million per year, compared to 5 million before the pandemic. Even so, home prices continue to rise nationally at a modest 1.2 percent year over year, though about 20 percent of the country is seeing prices decline, the largest drop in metro-level prices since 2023. The affordability crisis is worsening—by July, annual homeownership costs for a median-priced US house hit 47 percent of median household income, far above historical norms. First-time buyers are becoming increasingly rare, now at a record low share of 21 percent, and the median age of first-time purchasers climbed to 40.
Supply pressures remain acute as high tariffs and labor crackdowns strain construction input costs and availability. Inventory has reached its highest since 2019 but deals are harder to close and properties spend longer on the market. Large regional disparities persist: parts of the Northeast and some western states like Alaska show robust price growth, but major metros in Florida, Texas, and California are seeing price stagnation or decline.
Industry leaders are lobbying for faster Federal Reserve rate cuts to spur activity, but even recent rate moves brought limited relief. The sector remains split, with luxury buyers and older homeowners faring better, while younger generations and first-timers are locked out. With supply chain difficulties, rising insurance costs, and changing demographics, the housing industry is adapting cautiously and no significant near-term easing of these pressures is likely.
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