The U.S. housing market is witnessing strong demand as incomes rise and mortgage rates remain low, supporting the sales of homes and price appreciation. The supply of homes is Increasingly constrained while the demand grows, thus increasing the prices in many markets over the past few years. Yes, it is possible that higher prices may push some potential buyers out of the market. But at the same time, strong underlying demand is expected to help the housing sector avoid a sharp slowdown.
Market Dynamics:
The U.S. housing market growth is driven by favorable demographics as millennials are entering their prime homebuying years, supporting household sales and construction. Low mortgage rates make housing affordable. On the other hand, lack of inventory, especially at the entry level, affects sales as the supply of homes has declined year-over-year. To add to this, rising construction costs and regulatory hurdles inhibit builders from ramping up new supply. This imbalance in the supply and demand influences the ongoing home price appreciation. On the opportunity side, household formation among baby boomers downsizing presents long-term demand potential. If mortgage rates stabilize and inventory gradually improves, the housing sector may sustain steady expansion.
Key Features of the Study:
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