The US housing market has shifted toward a more balanced but fragile state in the past 48 hours as new data suggests both buyers and sellers are adjusting to changed economic conditions. Inventory is moderately improved, with over 1 million homes for sale nationwide, 15 to 20 percent higher than this time last year. However, that supply still lags behind 2019 levels, and homes now spend about a week longer on the market compared to last year as buyers take advantage of greater selection and less competition.
Mortgage rates have eased slightly to sit in the mid 6 percent range, down from recent peaks over 7 percent following the Fed’s rate cut in mid September. These shifts have stabilized markets and brought some relief, though affordability remains a challenge. The average 30 year fixed mortgage locked in around 6.7 percent last week, modestly boosting demand and resulting in mortgage purchase applications growing 25 percent year over year. Despite this improvement, consumer sentiment is still deeply pessimistic. Nearly 70 percent of Americans say it is a bad time to buy a home according to recent Fannie Mae surveys, as most believe the overall economy is on the wrong track.
Existing home sales remain stuck at an annual pace near 4 million units, a record 30 year low as many potential sellers hold onto the ultra low interest rates of previous years. In contrast, new home sales have surged as builders respond to demand by slashing prices and launching incentives, attempting to fill the inventory gap as others hesitate.
Recent market entrants are increasingly concentrated in the all cash segment, now dominating both affordable and luxury brackets in metros such as Phoenix, Miami, and Atlanta. This has led to intensified competition, especially for entry level homes, while also shifting traditional lender seller partnerships toward direct offers and instant buyer programs.
Supply chains for new construction remain stable, but tight land and labor markets are causing some delays in starting new projects. Regulatory changes have been limited this week, with no major federal actions, although some states are accelerating local reforms to increase housing density or reduce permitting barriers.
Compared to the prior quarter, this week represents a turn toward normalization with more homes, slightly lower rates, and greater buyer leverage, but the market remains defined by caution, limited affordability, and significant regional differences.
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