As the 2025 home view-in season begins, Americans look at some of the most difficult situations they have ever faced. Home prices have risen to highs, and mortgage rates are far above record lows. Thanks to the affordable squeeze, the typical age of first-time buyers has increased to 38.
Why is this housing market so challenging for home buyers? Condemn Covid-19. The health crisis has traversed the global economy, overloading home demand and sending prices skyrocketing.
How the pandemic fueled the housing boom
The US housing market was hot but not overheated as new infections began to grab headlines in early 2020. Median home sales prices rose nationwide to nearly $290,000, according to Redfin. This is a recovery from a crash 10 years ago. According to a national survey of bankrate lenders, the mortgage rate over 30 years was around 3.75%.
Then, in March 2020, Covid reached US lockdown. 2009 – Central bankers and federal officials moved aggressively to stimulate the economy, hoping to avoid a decade-long crash. The Federal Reserve has reduced its benchmark rate to zero. President Donald Trump has signed up for a drastic stimulus package.
The Fed does not determine mortgage rates, but this will affect the Treasury yields over the 10-year period. As these declined, the mortgage rate plummeted to below 3%.
The American, tempted by a super-stable mortgage and spurred by opportunities to work remotely, has given up on real estate. Prices in Utah, Idaho and Arizona skyrocketed when buyers from California and Seattle moved in.
For a while, the seller’s market was so intense that suburban homes could be subject to the war of bidding. According to a March 2022 report from the National Association of Realtors, each home sold received an average of five offers, with almost half of the buyers making offers above the listing price. Almost 85% of the house were sold within a month.
A rise in mortgage rates lead to a “home recession”
By the second half of 2021 it was revealed that federal government policies had shortened the pandemic recession, while overstimulating the economy. Inflation peaked at 9.1% in June 2022.
The Fed responded by rapidly increasing its benchmark rate. Treasury yields for 10 years followed, and ultimately the mortgage rate. According to a weekly survey by Bankrate, the average 30-year mortgage rate had lost to 8.01% by October 2023.
The rising mortgage prices have led to what many home economists call the “home recession.” Few homeowners wanted to give up their 3% loan, so they decided not to put their homes on the market. Between stock shortages and higher fees, existing home sales plummeted from a rate of over 6.4 million in early 2022 to a rate of around 4 million in early 2023.
Despite the lack of demand, home prices remained high. In the summer of 2023, the median price of existing homes for sale in the US was over $435,000, up 50% from pre-Covid prices.
Today’s Photo: Affordable Aperture
The pace of gratitude has slowed, but home prices are still far above pre-Covid levels. According to Redfin, in January 2025, the median home price was $418,489. Additionally, mortgage rates have fallen from recent highs, but averaged 6.67% as of Bank Rate’s April 2 survey, almost twice as much as early as 2020.
Bankrate estimates that home buyers will need approximately $117,000 in household income to qualify for a median home mortgage, which has increased by 50% since January 2020.
According to Fannie Mae’s March Home Purchase Sentiment Index, only 24% of Americans think it’s a good time to buy a home. This is reflected in the existing home sales rate, which was 4.26 million in February 2025, but despite lower fees, it has not changed since the previous year.
“With rising mortgage rates and rising home prices and rising national record levels, many aspiring home buyers feel that homeownership is out of reach,” says Mark Hamrick, Bankrate chief economy analyst.
Some relief in your vision
No one expects home prices to fall dramatically, but thanks seems to have settled into the medium range. Median home prices in February increased by 3.8% from the previous year, according to the National Association of Realtors. “Because of affordable constraints, the rate of growth will be moderate,” says Mark Palim, chief economist at home loan giant Fannie May.
Andy Walden, Vice President of Research and Analytics at Ice Mortgage Technology, says it’s inevitable that prices will have to fall after the duration of home prices has strongly surpassed the increase in income. “As we enter the spring home buying season, we’re very much seeing the country’s home price rate slow down,” he says.
And after years of shortage, the inventory of homes for sale has increased.
“The spring housing season starts with an increase in more sellers and homes for sale.” Daniel HaleChief Economist at Realtor.com. “However, the high cost of buying, coupled with growing economic concerns, suggests a sluggish response from buyers in the early spring. We are looking at a market with a rebalance and offering shoppers more options.”
Tips for Buyers
How to deal with difficult markets:
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Work on your credit score. Your lender will use your credit score to determine your mortgage rate. Increase your score before entering the application almost certainly improves the conditions offered.
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Consider putting less than 20%. A 20% down payment is ideal, but there is no problem with putting it in less. You can get a traditional loan with a 3% down or a 3.5% down Federal Housing Administration loan. Loans supported by the Bureau of Veterans Affairs typically do not require a down payment.
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Researching down payment support. All states offer some kind of grant to encourage homeownership. Not only can you qualify for down payment assistance, you can also support closure costs and other expenses related to home buying.
