The US Housing Market Is Now Completely Broken
New construction was the sector’s only bright spot. Mortgage rates near 8% have wrecked homebuilder sentiment and buyer appetite.
Seizing up.
Photographer: Joe Raedle/Getty Images
For the first time since the Federal Reserve started raising interest rates, every part of the housing market is now poised to worsen.
The resale market has been slumping since early 2022 as potential sellers sit on their homes rather than give up low mortgage rates. New houses had offered buyers some respite. No more. The recent surge in mortgage rates to as high as 8% has been too much for homebuilders. They will likely reduce construction in the months ahead as profit margins fall. Apartment construction has also rolled over in recent months as developers are hit with a combination of sluggish rent growth and high financing costs.