U.S. Homebuyer Demand Hits 30-Year Low as Mortgage Rates Surge
Rising mortgage rates and affordability challenges have driven a sharp decline in housing demand, with applications down 63% from their pandemic peak.
- Mortgage applications for home purchases have fallen to their lowest level since 1995, according to data from the Mortgage Bankers Association and Reventure App.
- The average rate for a 30-year fixed mortgage climbed to 7.09% last week, marking a seven-month high and further straining affordability for buyers.
- Real estate analysts highlight that typical mortgage payments now consume nearly 40% of gross income for the average U.S. homebuyer, exacerbating affordability issues.
- Despite recent Federal Reserve rate cuts, housing demand remains suppressed, with some analysts predicting potential price declines in certain Sun Belt and Mountain West states in 2025.
- Economists suggest significant changes—such as a 70% rise in incomes, a 40% drop in home prices, or a 4.6% reduction in mortgage rates—are needed to restore housing affordability to pre-pandemic levels.
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