It will take more than just a drop in interest rates to save the housing market

Published On Sep 23, 2024, 8:34 AM

The recent half-percentage-point interest rate cut by the Federal Reserve has improved buying power for homebuyers, but it is insufficient to resolve the ongoing housing market crisis in the U.S. Despite lower borrowing costs, several factors like a significant shortage of homes, rising homeowner expenses, and regulatory challenges persist. To stabilize the market, estimates suggest that around 7 million new housing units need to be constructed. Proposed plans from political figures to boost housing supply may face obstacles due to zoning laws and workforce shortages. The article further notes that even as mortgage rates drop, many homeowners are hesitant to sell due to their existing low rates. Given these complexities, while a modest recovery in homebuying may occur, substantial demand will likely keep prices elevated amid limited supply.