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Homebuyer demand is falling to its lowest level in 30 years

Homebuyer demand for mortgages is currently at its lowest level in 30 years, according to data from real estate analytics tool Reventure App.

Newsweek contacted the Mortgage Bankers Association via email outside of regular business hours on Tuesday for comment.

Why it matters

Mortgage rates could be a big factor this year in determining whether the housing market becomes more affordable for Americans, something President-elect Donald Trump is expected to strive for – although Reventure’s data suggests many remain cautious while waiting for it wait for interest rates to fall further.

What you should know

The sudden rise in mortgage rates after the end of the COVID-19 pandemic, which followed the Federal Reserve’s efforts to curb the rise in inflation, has exacerbated the affordability crisis in the US housing market in recent years.

Despite slowly rising inventories in 2024 and the central bank’s decision to cut its key interest rate – a move that is expected to lower mortgages – a chronic lack of supply has kept prices high across the country even as demand for homes and sales has fallen.

Mortgage applications are down 63 percent compared to the pandemic peak, according to Reventure data, which summarizes information from the Mortgage Bankers Association and Investing.com.

“The main issue for buyers right now is a lack of affordability. The typical U.S. home buyer faces a mortgage payment that represents nearly 40 percent of their gross income if they buy now,” said Nick Gerli, real estate analyst and CEO of Reventure App, wrote on X, formerly Twitter, commenting on the data.

“The last time demand was this low was in 1995,” says Gerli wrote on Monday. “It’s really shocking how much demand has fallen.”

In a follow-up post, he added that through the first week of January, mortgage applications were down 14 percent from the same week last year, 19 percent from 2023, 54 percent from 2022, 59 percent from 2021 and 52 percent from 2020.

“Mind you – this comes four months after the Fed cut rates for the first time. There are also two further interest rate cuts. Plus, the presidential election will be decided,” Gerli added in another post, listing factors that are likely to keep homebuyers on the side of the housing market.

“Despite all of these apparent tailwinds for the real estate market, demand is still rock bottom,” Gerli continued.

Residential mortgages
A new home is being built in a housing development in Fairfax, Virginia on August 22, 2023. Demand for mortgage applications has plummeted since the height of the pandemic, with not even a new president and the promise…


ANDREW CABALLERO-REYNOLDS/AFP via Getty Images

What people say

Kara Ng, a senior economist at Zillow, said previously Newsweek: “Buyers should be prepared for a year full of ups and downs in mortgage rates…We can expect many ups and downs in mortgage rates throughout the year as both the Fed and markets will be in reaction mode as new data becomes available .”In.”

Matthew Walsh, an economist at Moody’s Analytics, said previously Newsweek: “To give a sense of how low affordability is and how this will impact demand for housing, to recover we would need about a 70 percent increase in incomes or about a 40 percent decrease or decrease in house prices “We will see mortgage rates increase by 4.6 percentage points,” the level of housing affordability we saw in 2019.”

What happens next

Gerli said the decline in mortgage applications compared to the pandemic years sets the stage for an “interesting start to 2025” for the U.S. housing market.

“Buyer demand is still very low, at a time when sellers were told the market would improve due to interest rate cuts and the end of the election,” he wrote.

In parts of the country where inventory is growing and demand has waned, such as cities in Florida and Texas, prices are already starting to fall. “Significant weakness is now evident in certain U.S. real estate markets where prices are beginning to fall,” Gerli wrote.

“This includes Texas and Florida and may soon include states such as Tennessee, Colorado, Arizona, Utah, Alabama and Georgia,” he added. “These are the areas where price growth was lowest until the end of 2024.”

The real estate analyst said it would not be a surprise if “house price growth slowed significantly nationally in 2025.” He added: “It is possible that the situation for the country will settle at around 0 to 1 percent compared to last year. While levels are declining in about 10 to 12 different states in the Sun Belt and Mountain West.”

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