A Slump in Home Sales Amid Soaring Prices

October 23, 2024

NEW YORK, USA – Sales of existing homes in the United States have slumped to their weakest pace in 14 years, insiders say, reinforcing a growing negative view of the state of the housing market. Prices remain high, and so volume is not low enough to make homes more affordable for this higher share of would-be buyers. This will be a housing market downturn, further characterized by higher interest rates, economic uncertainty, and limited inventory of homes for sale, where the shock waves spread throughout the economy to affect the tech-driven real estate sector.

Market Report: Numbers Signal Trouble

With a report from the National Association of Realtors, existing home sales plummeted to their lowest levels since the 2008 financial crisis. Sales are down 17% from last year, mostly due to high mortgage rates, which have been above 7% for all of 2024, according to analysis.”.

At minimum, demand for homes is down, while prices remain stubbornly high-to-date with median home prices up 2.6 percent year-over-year. According to industry experts, the blame lies with a supply-demand imbalance; tight housing inventory continues to inflate prices despite weakening buyer interest.

Interest-rate increases have priced many would-be buyers out of the market, according to Robert Fisher, an economist specializing in housing markets. Only affluent buyers or investors remain; that’s why prices haven’t plunged dramatically, even though sales are lackluster.

International Implications and Global Housing Trends

The U.S. housing market slump is not occurring in isolation. Similar trends are emerging in Europe, where rising interest rates have also depressed home-buying activity in countries like Germany and the UK. Central banks globally are grappling with inflation, leading to tighter monetary policies that are squeezing housing markets across continents.

Investors in Asia are also closely monitoring the U.S. housing slowdown, as any prolonged downturn could affect global economic stability. Real estate investment trusts (REITs) and international property funds with exposure to the U.S. market are now reassessing their strategies.

Meanwhile, global supply chain disruptions have further complicated housing market conditions. Builders face rising costs and delays, limiting new construction and contributing to the ongoing shortage of homes for sale.

Tech and Real Estate: The Impact on Proptech Platforms

Just a short decade ago, the real-estate sector underwent significant change. Even tech-driven property platforms are not immune to slowing in the housing market. Such companies as Zillow, Redfin, and Opendoor are experiencing downward trends in users entering the market on both sides of the transaction.

The housing downturn is also adversely affecting the short-term rental market. Platforms such as Airbnb are also experiencing a decrease in rental property demand, especially in locations that heavily rely on tourism due to the economic squeeze leading consumers to have fewer disposable incomes.

Despite this, proptech companies use data analytics and AI to identify emerging trends and react accordingly to the changing nature of the market. AI-powered tools help realtors and buyers hone in on more specific, targeted property searches and pricing strategies-though little can these technologies do in relation to the macro forces at play.

Affordability Crisis: A Long Road Ahead

This is a lethal combination that creates the perfect storm in terms of affordability where high mortgage rates are coupled with high-priced homes. The first-time homebuyers will feel the pinch the most as it would be a postponement of purchase or renting. This has also contributed to increasing demand and pushing the price tag on rentals in the cities.

Housing advocacy groups are asking the government to make a move on the issue, seeking more affordable housing initiatives and incentives for house builders to increase supply. “Unless that policy intervention is implemented, we risk deepening the housing crisis and leaving more people priced out of homeownership,” said Jane Collins, director of the National Housing Coalition.

A Market in Need of Stabilization

The weakening U.S. housing, which hit an unprecedented 14-year low in existing home sales, clearly outlines serious problems for the economy. With prices still too high, high mortgage rates, and low inventory, the housing environment remains unsustainable for most Americans.

Although the role of technology in the reshaping of real estate strategies will continue, it is the large economic and policy decisions in the coming months that will determine whether the market stabilizes or stumbles further. Given the attention accorded by the rest of the international markets, the U.S. housing sector stands at a crossroads-barely critical, but potentially consequential beyond its borders.

And whether or not Federal Reserve moves on monetary policy or new housing initiatives come along to alter the landscape on affordability are mere guesses. The message, however, is clear: without meaningful action, the housing crisis isn’t going to dissipate anytime soon.