By Daily Mail (U.S.) | Created at 2025-03-27 02:52:18 | Updated at 2025-04-05 15:39:16
1 week ago
Wells Fargo says home sales have slowed to levels last seen in the aftermath of the Great Recession.
Unlike 2008, the broader economy remains strong — home prices aren't crashing, and unemployment isn't soaring.
But the housing market is still suffering because potential buyers can't afford the high home prices along with high mortgage rates.
Meanwhile, sellers won't budge because can't afford to lose their low mortgage rates. This leads to not a lot of people buying or selling homes at the moment.
In January, total home sales reached 4.7 million, a figure Wells Fargo economists say is 'only modestly above the weak rate experienced between 2008 and 2010.' Before the pandemic, monthly home sales averaged around 6 million.
Housing demand soared during the pandemic, sending prices and mortgage rates to new highs. But now, high costs and borrowing rates are keeping both buyers and sellers on the sidelines.
Homeowners that secured a low mortgage rate during the pandemic or who have paid off their home aren't selling since they do not want to give up their low rates.
'The tepid pace of home sales can not be blamed on a recession,' says the report.
Wells Fargo says home sales have slowed near the pace of how they were in the wake of the Great Recession, when not many people were buying or selling homes
'Rather, the main factor weighing on residential activity continues to be adverse affordability conditions.
In addition to high mortgage rates, home prices continue to rise.'
Since February 2020, home prices have risen by 45 percent.
On top of that, the average 30-year fixed mortgage rate is 6.67 percent. In 2020, mortgage rates were just 3 percent.
The mortgage rate lock-in is the main reason behind the slow rate of sales, since they account for the largest share of total home sales.
The pace of the slow sales is expected to remain that way for the next several years.
'Given affordability will remain extremely unfavorable for most buyers, the pace of home sales is expected to remain weak and not far from the low levels hit in the aftermath of the financial crisis,' Wells Fargo senior economist Charlie Dougherty tells Fortune.
Meanwhile, in January, Wall Street issued a chilling warning that US homes are selling for 35 percent higher than they should be.
Wells Fargo senior economist Charlie Dougherty
Real estate analytics firm Green Street Advisors studied the stock performance of two publicly traded companies that own and rent out more than 137,000 single-family homes throughout the country.
Investors believe the homes owned by Invitation Homes and American Homes 4 Rent are overpriced.
An average home in the metro areas where Invitation Homes owns properties sell for $415,000, according to Green Street's analysis.
The share price, which has tanked 10 percent in the last year, suggests that investors think $310,000 is what the company's homes are actually worth.
Overall, in 2024, listing and mortgage prices remained high, and only 24 percent of homebuyers were first-timers in 2024 - the lowest on record, according to the National Association of Realtors.
