Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Sunday, July 27, 2025
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

The housing market is flashing warning signs about high mortgage rates and Gen Z and millennial first-time buyers, Capital Economics says

July 10, 2025
in Business
Reading Time: 35 mins read
A A
The housing market is flashing warning signs about high mortgage rates and Gen Z and millennial first-time buyers, Capital Economics says
0
SHARES
ShareShareShareShareShare

READ ALSO

US-Japan trade deal gives Trump control over $550 billion. It could be ‘vapor ware’

Gwyneth Paltrow tackles Astronomer’s most common questions as ‘very temporary’ spokesperson — ‘OMG! What the actual f’

America’s housing market is flashing red on multiple fronts, with affordability at its worst in years and little relief in sight. From elevated mortgage rates to general lack of affordability to a death of first-time home buyers, here’s why Capital Economics says it sees “no clear path to housing recovery,” with housing market activity stuck in a slump since 2023. There’s just no end in sight, according to the London-based research firm. Here’s why.

1. Mortgage Rates Stuck Above 6.5%

  • Mortgage rates are forecast to remain above 6.5% through the year, as the Federal Reserve is not expected to resume rate cuts until 2026.
  • High rates are keeping monthly payments elevated, locking many would-be buyers out of the market.

2. It’s Not Seen as a Good Time to Buy

  • The share of households saying it’s a good time to buy a home is near an all-time low.
  • Record-high home prices, tight supply, and high borrowing costs have combined to make homeownership less attainable than at any point in recent memory.
  • Even as more homes are being listed, the overall supply remains low by historical standards, offering little relief to would-be buyers.

3. Home Sales Recovery Is Weak and Slow

  • Existing home sales are projected to be lackluster, reaching an annualized pace of 4.3 million in 2026 and 2027—well below pre-pandemic norms.
  • The market remains in a prolonged slump, with activity unlikely to recover meaningfully until affordability improves.
  • There is no clear trigger for a price correction: home prices are expected to rise by 1% in 2025 and 2% in both 2026 and 2027, keeping the market out of reach for many.

4. First-Time Buyers Are Especially Hard-Hit

  • First-time buyers (FTBs) are facing the toughest conditions in decades. Last year, just 1.1 million FTB purchases were recorded—half the historical average.
  • This is tough news for members of the Gen Z and millennial generations wanting to break into the housing market, since they are overwhelmingly the age of most historical FTBs, from the late 20s through early 40s.
  • Higher borrowing costs and the lack of built-up home equity make it especially difficult for new entrants to break into the market.
  • Even as mortgage payments as a share of income are expected to ease slightly (dropping below 35% of median FTB income in 2026), any rebound in FTB activity is expected to be modest at best.

Homebuilding: Margins Squeezed, Starts Slow

  • Homebuilders have kept sales afloat by cutting prices and offering incentives, but rising construction costs—especially from tariffs on lumber—are squeezing margins.
  • Single-family housing starts are forecast to fall to 900,000 by end-2026, before a slight recovery in 2027.
  • New home sales are still robust, but mainly because the housing market has a a structural shortage of existing homes for sale. Also, the “new build premium”—the extra cost buyers typically pay for new properties—has disappeared as builders compete for budget-conscious buyers.
  • Price cuts and longer time on market: 20% of listings now include a price drop, and the average time on market of 45 days is back near pre-pandemic levels.

Rental Market: Demand Strengthens as Supply Tightens

  • Rental demand is surging as homeownership becomes less attainable, especially for younger adults. For 25–34-year-olds, owning a starter home now costs more than 50% of average income, compared to just under 39% for renting.
  • Vacancy rates are falling: The apartment vacancy rate is expected to drop from its current 6.4% to 5.4% by end-2027.
  • Rent growth is set to accelerate: After a period of subdued increases, rent growth is forecast to reach 2% in 2025 and 3.5% in 2026.
  • Multifamily construction is slowing sharply, with starts projected to rise only gradually to 430,000 by 2027—well below the post-pandemic boom.

Outlook: No Quick Fix for Housing Woes

  • Affordability will remain stretched for the foreseeable future, with no clear trigger for a price correction.
  • Home sales will stay muted, and the market will not recover meaningfully until mortgage rates fall and incomes catch up.
  • Landlords will be winners from this environment, as they’ll have room to raise rents from such tight market conditions. Capital Economics forecasts rent growth of 2% in 2025 and 3.5% in 2026.

In summary, the U.S. housing market is set for a slow, grinding recovery, with buyers facing persistent affordability challenges and rents ticking upward because of the ongoing freeze in for-sale activity.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

Introducing the 2025 Fortune 500, the definitive ranking of the biggest companies in America. Explore this year’s list.

Credit: Source link

ShareTweetSendSharePin
Previous Post

Amazon warehouse workers lose jobs after Trump immigration crackdown

Next Post

Charley Hull exits Evian Championship after collapsing twice

Related Posts

US-Japan trade deal gives Trump control over 0 billion. It could be ‘vapor ware’
Business

US-Japan trade deal gives Trump control over $550 billion. It could be ‘vapor ware’

July 26, 2025
Gwyneth Paltrow tackles Astronomer’s most common questions as ‘very temporary’ spokesperson — ‘OMG! What the actual f’
Business

Gwyneth Paltrow tackles Astronomer’s most common questions as ‘very temporary’ spokesperson — ‘OMG! What the actual f’

July 26, 2025
Amazon’s new Alexa+ is pretty good — but is that enough in the ChatGPT age?
Business

Amazon’s new Alexa+ is pretty good — but is that enough in the ChatGPT age?

July 26, 2025
Reinsurance Group of America’s Tony Cheng on staying humble in leadership
Business

Reinsurance Group of America’s Tony Cheng on staying humble in leadership

July 26, 2025
S&P 500 sets 5 all-time highs in one trading week
Business

S&P 500 sets 5 all-time highs in one trading week

July 26, 2025
Trump defeats Australia’s mad cow disease restrictions in deal to ship American beef overseas
Business

Trump defeats Australia’s mad cow disease restrictions in deal to ship American beef overseas

July 25, 2025
Next Post
Charley Hull exits Evian Championship after collapsing twice

Charley Hull exits Evian Championship after collapsing twice

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Meet Luka Mitrovic, 2015 NBA draft pick the Knicks got rights to in trade

Meet Luka Mitrovic, 2015 NBA draft pick the Knicks got rights to in trade

June 27, 2025
Naomi Osaka has ‘nothing positive to say’ after Wimbledon exit

Naomi Osaka has ‘nothing positive to say’ after Wimbledon exit

July 5, 2025
Trump says he has group of ‘very wealthy people’ ready to buy TikTok

Trump says he has group of ‘very wealthy people’ ready to buy TikTok

June 30, 2025
Gleyber Torres putting his Yankees past behind him in All Star Tigers season

Gleyber Torres putting his Yankees past behind him in All Star Tigers season

July 16, 2025
What’s in the Jeffrey Epstein grand jury transcripts?

What’s in the Jeffrey Epstein grand jury transcripts?

July 21, 2025
Trump’s DOJ sues to oust Hollywood movie CEO and 2 others from broadcasting board

Trump’s DOJ sues to oust Hollywood movie CEO and 2 others from broadcasting board

July 16, 2025
Nothing’s first over-ear headphones want to be a quirky 0 AirPods Max alternative

Nothing’s first over-ear headphones want to be a quirky $300 AirPods Max alternative

July 1, 2025

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Yankees fall flat again in second straight ugly loss to Phillies
  • US-Japan trade deal gives Trump control over $550 billion. It could be ‘vapor ware’
  • I visited a Costco in Japan—6 ‘longevity foods’ I couldn’t leave without buying
  • Gwyneth Paltrow tackles Astronomer’s most common questions as ‘very temporary’ spokesperson — ‘OMG! What the actual f’

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In