Home sales drop to a 16 year low – the worst since the 2008 housing crisis. Will house prices crash?

Home sales drop to a 16 year low — the worst since the 2008 housing crisis.

Will house prices crash? pic.twitter.com/2oo5Ba6bnI

— Peter St Onge, Ph.D. (@profstonge) April 29, 2025

• Seems like a mixture of issues that conflict one another. Rates, prices, incomes, and net worth. Change one of these (positive or negative), the others will be affected.  Novi
• Boomers and older Xers drive the economy with consumer spending driven by their equity in overvalued homes. – Benton H
• I would like to add to everything you said as yes but also I think the tariff uncertainty shocked so many people into stopping shopping for a home. As their bank/investment account dipped and was to be used for down payments – Jeff
• They won’t crash. Not enough inventory. They might go down in price a little. Buying will commence one interest rates are dropped to stimulate the economy once the FED is done trying to create inflation
• Could it possibly be that home owners are waiting to see what the new tax deal is before incurring a massive capital gain? How many houses that are being rented or held empty would be sold if there were no depreciation recapture or capital gain taxes? – Rene
• Corporations like Blackrock buying up all the real estate just to turn around and charge exorbitant rents didn’t help the situation. And of course, the unconstitutional Federal Reserve will not cooperate to help the Real estate market. On the other hand, real estate IS overpriced, and a market correction on housing prices caused by high inventory would be welcome IMHO. – COnservative Tree-Hugger
• I’ve decided to hold off on buying a house. It’s ridiculous prices everywhere you look. When I can’t find a first home outside of an unsafe neighborhood for less than $300K at 7% interest, I lose interest, especially when the home is also 100 years old or more and a money pit. – Kaizen
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• Prices need to come down for housing affordability to increase. Since interest rates are not high, if prices don’t come down, generations of Americans will be unable to pursue the American dream of owning a home. – Clem
• Powell won’t lower interest rates. Blackrock salivates at the thought of another real estate rout. Keep your powder dry.
• I’m sure they’ll re-assess the values of all of our homes to reflect the drop in the market. It’s funny how property tax reassessments only seem to trend in the upward direction.
• I think it’s more a mortgage issue than a price issue. If you have a 30-year fixed-rate mortgage in the 2-3% range, it just doesn’t make any sense to sell. The US Treasury currently has to pay almost 4.7% to borrow for 30 years, and current mortgage rates add a risk premium on top of that. Inflation has been stuck above the Fed’s 2% target since the inflationary 2021 stimulus, so for homeowners who bought or refinanced during the Wuhan-virus pandemic, real mortgage rates have been close to zero or even negative for years. If you want to move and have a 2-3% mortgage, it makes much more sense to rent out your current property and then rent something somewhere else, rather than selling, at least unless/until mortgage rates come down. Even if rates do come down, they’re unlikely to reach pandemic levels again, so it might make sense to hold onto properties with 2-3% mortgages until the mortgage is paid off. The real mortgage debt and mortgage payment decay with inflation, but rents don’t, so the rental income is likely to be flat or rising in real terms over time, whilst the real costs steadily decline. By international standards, gross rental yields in the US aren’t especially low either, which means that property prices aren’t especially high. Part of the reason is relatively high property taxes in the US, but even after-tax rental yields are higher in the US than in most developed countries. – Thomas Stephens
• Appreciate the well thought out comment. Well done. I would argue that the rates and the prices work together to create the current mortgage trap. As usual, the overlords created ‘unexpected results’ with the foolishly low interests rates for so long being followed by the quick increases. That is how they set the trap, intentionally or not, but likely not. Prices need to come down, and rates likely will need to drop as well. Both coming down together would have a multiplying impact on demand. – Ed beery

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