"Ever since the Federal Reserve jacked up borrowing rates to fight inflation in 2022, real estate agents, economists, and politicians of all stripes have grumbled about the sluggish pace of home sales and the market's steep price of admission. But near the end of 2024, housing prognosticators began reporting signs of a thaw: Mortgage rates had hit two-year lows, affordability appeared to be improving, and there were finally a few more options for buyers. 2025 was poised to be the comeback year for homebuying."
""All the ingredients were there for a more robust recovery," Kara Ng, a senior economist at Zillow, tells me. "And it just didn't happen." It's no mystery why. President Donald Trump's trade war, combined with a tepid labor market and a bump in mortgage rates, led many potential movers to stay put. Those who had a job or a cheap home loan held onto those things for dear life."
""The data right now is suggesting there's more demand," says Ethan Flynn, an agent in the Nashville area. "I'm optimistic." Despite a recent spike in mortgage rates, thanks to Trump's short-lived, Greenland-inspired tariff threats, there are legitimate signs of sunnier days ahead for real estate. Three key factors - prices, available inventory, and yes, even mortgage rates - support the tentative optimism."
The Federal Reserve's 2022 rate hikes slowed home sales and raised barriers to entry. By late 2024 mortgage rates fell to two-year lows, improving affordability and expanding buyer options, which raised expectations for a 2025 recovery. That recovery stalled as President Trump's trade war, a tepid labor market, and occasional mortgage-rate bumps kept many potential movers in place and left sales flat. Early 2025 shows renewed signs of demand, with prices, available inventory, and mortgage rates offering tentative support. Some economists call this The Great Housing Reset, forecasting more activity if trends persist. Short-lived tariff threats temporarily raised rates but did not reverse improving signals.
Read at Business Insider
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