"Federal Reserve researchers estimate "new construction would have had to increase by roughly 300% to absorb the pandemic-era surge in demand." Unlike housing demand, housing stock isn't as elastic and can't quickly ramp up. As a result, the heightened demand drained the market of active inventory and caused home prices to overheat, with U.S. home prices in June 2022 sitting a staggering 43.2% above March 2020 levels."
"Since that national boom ended in mid-2022, the housing market has been moving through a cyclical cooling phase and undergoing a period of recalibration and normalization after such a large burst. Look no further than the share of U.S. homes that sold below their original list price, by year, according to a new Redfin report: 2018 -> 62% 2019 -> 64% 2020 -> 55% 2021 -> 38% 2022 -> 42% 2023 -> 54% 2024 -> 58% 2025 -> 62%"
Pandemic-era housing demand surged because of ultralow interest rates, fiscal stimulus, and expanded remote work. Federal Reserve researchers estimate new construction would have had to increase by roughly 300% to absorb the surge. Housing stock could not ramp up quickly, which drained active inventory and caused U.S. home prices to rise 43.2% by June 2022 versus March 2020. The national boom ended in mid-2022, leading to a cyclical cooling and market recalibration. Redfin data show the share of homes selling below original list price fell during the boom then rose to 62% in 2025. Regional differences persist, with Sun Belt markets seeing more below-list sales while many Northeast and Midwest metros remain comparatively resilient; parts of San Francisco and San Jose have shown renewed strength amid the AI boom.
Read at Fast Company
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