Why Are Fewer People Buying Homes in the US?

In 2024, American home sales hit a new low, falling to numbers not seen since 1995. The reason? Sky-high home prices and high mortgage rates are making it tough for people to buy homes. Previously owned homes, which make up most of the market, saw a total of only 4. 06 million sales last year. That's a real drop! Interest rates on 30-year fixed mortgages peaked at 7. 22% in 2024. Although they dipped a bit, they're still high at around 6. 96%. Home prices? They've been going up for 18 months straight, hitting a record high of $407, 500. Even with these challenges, there was a small boost in sales at the end of the year, with December seeing a 2. 2% increase from November.

Experts say buyers are still interested in the long-term benefits of homeownership, like job and wage gains. But there's a big problem: there aren't enough homes on the market. In fact, there's a shortage of about 3. 7 million units! In some markets, insurance premiums are also soaring, adding to the cost. High borrowing rates are slowing down home building, too. But builders are hopeful that deregulation might help increase the supply of homes this year. Will the market improve in 2026? Maybe not much. Mortgage rates are expected to stay above 6%, and home prices are still really high. So, it might be tough for buyers.

Actions