The housing market in the United States (US) is currently in a critical state as home prices soar while affordability is deteriorating.
The median home price is reported to have reached more than $440,000 this year, while the average monthly mortgage payment has increased to more than $2,500.
This situation is further exacerbated by the “lock-in” phenomenon when many homeowners are reluctant to sell because they are tied to lower old interest rates.
Home inventory remains limited and used home sales have fallen to their lowest level since the 2008 crisis, causing the market to seem to be ‘frozen’.
Many renters are also burdened when they have to allocate more than 30% of their income to pay monthly rent.
The Federal Reserve (Fed) has expressed concern that the slowdown in the housing sector could affect overall economic growth.
However, lowering interest rates will not necessarily solve the problem because mortgage rates remain more influenced by the bond market, while the real issue still stems from a shortage of housing supply.
US Treasury Secretary Scott Bessent announced new steps to address the issue of high housing costs.
The Trump administration is considering declaring a housing emergency and exempting construction materials tariffs to ease market pressures.
Analysts say that without zoning reforms and large-scale construction incentives, the housing crisis is expected to drag on for several more years.
