{"id":216608,"date":"2025-09-10T22:24:16","date_gmt":"2025-09-10T22:24:16","guid":{"rendered":"https:\/\/www.europesays.com\/us\/216608\/"},"modified":"2025-09-10T22:24:16","modified_gmt":"2025-09-10T22:24:16","slug":"is-the-housing-market-improving-for-buyers-wral-com","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/216608\/","title":{"rendered":"Is the housing market improving for buyers? :: WRAL.com"},"content":{"rendered":"

Ever since the pandemic, the housing
\nmarket has been difficult for buyers<\/a>, especially for young and first-time
\nbuyers. Housing prices have been rising
\nat a rate much faster than both the overall inflation rate and the growth in household
\nincome. At the same time, mortgage interest rates jumped 4.5percentage points
\nbetween 2020 and 2023.\u00a0 <\/p>\n

These changes put potential buyers in a
\ndouble bind. Not only are homes more
\nexpensive, but financing the purchase is also more costly. As a result, the average monthly mortgage
\npayment as a share of a new buyer\u2019s income doubled between 2020 and 2023.<\/p>\n

Hence, it should not be a surprise that
\nhomebuying and homeownership declined in North Carolina this decade. In 2024 the percentage of households who were
\nhomeowners was 65%, down from 69% in 2020 and well below the 72% at the
\nbeginning of the 21st century.<\/p>\n

These changes are troubling for several
\nreasons. First, many households who
\nwould prefer to live in single family homes instead of high density units are
\nbeing denied that choice. Second,
\nsingle-family homes have traditionally been a way for young households to build
\nwealth as their home increases in value over time. Among all households, including homeowners
\nand renters, home values account for almost a quarter of all wealth. For just homeowners, home values account for
\nhalf of their wealth.\u00a0 And unlike many
\ninvestments, such as stocks, it is rare for home values to decline.<\/p>\n

Some argue there are also non-financial
\nbenefits to owning a home. Children
\nliving in homes have more access to outdoor activities, thereby getting more
\nexercise and exposure to fresh air and sunshine. Homes with outdoor space, in particular, can
\nprovide opportunities for children to have chores, thereby allowing them to
\nlearn about work and responsibility. Last, there may be a psychological benefit
\nto the family from the pride of owning and maintaining a home.<\/p>\n

How can we return to an economic
\nenvironment where home affordability improves and more households \u2013 especially
\nyoung households \u2013 can easily purchase a home? The answer is easy. We need more
\nhomes built, we need home prices to stop outpacing household income, and we
\nneed lower mortgage interest rates.\u00a0 <\/p>\n

Accomplishing this recipe is not easy, but
\nthere are some positive signals giving us hope.\u00a0
\nLike the nation, home construction has been inconsistent in North
\nCarolina. Understandably, there was a
\nbig drop in home building during the pandemic. Subsequently there was a strong
\nrebound immediately after the pandemic. But the rebound was cut short by the surge in inflation in 2022 and
\n2023, which pushed up construction costs. <\/p>\n

But once the Federal Reserve (the \u201cFed\u201d) enacted
\npolicies to lower the inflation rate, housing construction recovered. However, during the last two years of 2024
\nand 2025, there\u2019s been an erratic pattern in home construction with no clear
\npath. Experts think uncertainties
\nrelated to interest rates, tariff rates, and the economic health of households
\nare affecting builders. However, one
\npiece of good news is home construction today is running at a higher level than
\nbefore the pandemic.<\/p>\n

Home prices continue to rise in North
\nCarolina, but the pace has slowed. When
\nprice changes are tracked for homes with the same features \u2013 such as square
\nfootage, number of rooms, etc.- there\u2019s been over a 70% rise between 2020 and
\n2025. But three-quarters of that
\nincrease occurred between 2020 and 2022. Since then, home prices have been
\nrising at single-digit annual rates.<\/p>\n

Lastly, an overall measure of housing
\naffordability that accounts for home prices, mortgage interest rates, and
\nhousehold income shows bad news and good news. The index sank by more than 50% from 2020 to 2024. But during some months in 2025 the index rose
\nvery modestly, mainly due to moderating home price inflation, some reduction in
\nmortgage interest rates, and improvements in household income.<\/p>\n

So, what\u2019s the conclusion? Are there any signs the housing market is
\ngetting better for buyers? Also, what
\nshould you look for to anticipate that buying a home will become easier?<\/p>\n

The analysis I\u2019ve presented does indicate
\nsome positives in the housing market in terms of moderating price increases,
\ncontinued construction, and modest declines in mortgage interest rates. Indeed,
\nin the past two years, the 30-year fixed mortgage interest rate fell
\n<\/a>three-quarters of a percent to near 6.5%. This is certainly higher than the sub 3% rate immediately after the
\npandemic. But that historically low rate
\nwas a result of the Fed pumping enormous amounts of cash into the economy to
\novercome the Covid recession. We later
\npaid for that policy with an annual inflation rate over 9%. While the Fed won\u2019t
\npush mortgage rates back to 3%, they have strongly indicated they are ready \u2013
\nperhaps as early as September \u2013 to support lower interest rates, including
\nmortgage rates. So, watch for interest
\nrate announcements from the Fed.<\/p>\n

If the Fed does lower interest rates, the
\naction could cause increased home construction as builders become more
\noptimistic about households\u2019 ability to purchase homes. This could moderate home price increases to
\nbe more in line with the improvements in worker earnings that have been
\noccurring. Therefore, if you\u2019re in the market to buy a home<\/a>, continue to watch
\ntrends in construction and prices. There
\nmay be some good news ahead.<\/p>\n

The housing market has been tough for
\nbuyers in recent years. But are there
\nsome changes occurring that could make a home purchase easier? You decide<\/p>\n

__________________________<\/p>\n

Dr. Mike Walden
\nis a William Neal Reynolds Distinguished Professor Emeritus at North Carolina
\nState University.<\/p>\n

\u00a0\u00a0\u00a0\u00a0<\/b><\/p>\n

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