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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. How would you describe

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Speaker 1: the state of the housing market in your city right

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Speaker 1: now in one word?

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Speaker 2: In one word nuanced, good and bad weird.

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Speaker 1: Those were the voices of real estate agents I talked

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Speaker 1: to in a few major US cities. And while there's

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Speaker 1: no single perfect word to capture the vibe of the

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Speaker 1: housing market this past season, the data itself is clear.

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Speaker 1: This spring, across the board, people aren't buying and selling

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Speaker 1: as much as they normally do.

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Speaker 2: I think spring was just a time of turmoil.

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Speaker 1: Colin Wainwright is a real estate broker in Nashville, Tennessee.

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Speaker 2: So what we ended up seeing is a little bit

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Speaker 2: of a freeze, a little bit of flattening out. A

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Speaker 2: lot of buyers are still failing locked out.

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Speaker 1: April through June is usually the busiest time for the

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Speaker 1: real estate industry, when the school year is ending and

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Speaker 1: families are to move before everything starts back up again

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Speaker 1: in the fall. But this May, the number of Nashville

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Speaker 1: homes sold was down sixteen percent compared to last year,

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Speaker 1: according to the real estate brokerage Redfin. Sales ticked up

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Speaker 1: slightly in June, but Bloomberg's US housing reporter Prashant Gopaul

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Speaker 1: says there's an even grimmer picture for home sales emerging

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Speaker 1: across the country.

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Speaker 3: I looked at the spring season and that was the

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Speaker 3: lowest since twenty twelve.

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Speaker 1: His one word to describe the market.

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Speaker 3: Week, I mean, actually, you could say it's the weakest

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Speaker 3: housing market since the wake of the Great Financial Crisis.

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Speaker 1: When it comes to real estate, people always talk about

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Speaker 1: whether we're in a buyer's market or a seller's market.

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Speaker 1: But Ansley Stokes, a realtor in the Washington, DC area,

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Speaker 1: says this spring freeze has left everyone frustrated.

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Speaker 4: In a slower market like we're in now, and both

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Speaker 4: parties can sometimes feel like they are losing.

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Speaker 1: I'm Sarah Holder, and this is the big take from

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Speaker 1: Bloomberg News Today. On the show, a Stalemate in the

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Speaker 1: American housing market, How unaffordability and uncertainty have combined to

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Speaker 1: slow down US home sales, and what could get people

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Speaker 1: moving again. Buying a house in the US has become

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Speaker 1: more and more of a pipe dream for many Americans.

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Speaker 1: But Bloomberg's Pishanko Paul says there were signs that the

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Speaker 1: country's punishing housing market was starting to get better, at

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Speaker 1: least for some buyers. At the beginning of this year.

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Speaker 3: We saw more people starting to list their homes again.

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Speaker 3: We saw inventory as a whole started to rise, and

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Speaker 3: then mortgage rates ticked down slightly. So all of that

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Speaker 3: really looked positive. It looked like we were finally beginning

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Speaker 3: to break out of the cycle. But that didn't quite.

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Speaker 1: Happen because just as things were looking up, the economy

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Speaker 1: started feeling the effects of Trump's first few months in office.

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Speaker 3: Those inventory levels rose, but buyers didn't show up, and

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Speaker 3: you know, they didn't show up because there was a

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Speaker 3: lot of chaos in the economy.

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Speaker 1: The Trump administrations cuts to the federal workforce continue.

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Speaker 4: And the moves at Wall Street plumbers, small business owners

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Speaker 4: are terrified over what's next.

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Speaker 3: After President Trump's tariff announcement, it was one thing after

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Speaker 3: the other, and I think a lot of buyers just

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Speaker 3: werespooked by the whole thing. That's the big change this year.

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Speaker 4: We track the absorption rate. It's basically what percentage of

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Speaker 4: the available inventory is getting taken off the market by

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Speaker 4: buyers in any given one month period.

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Speaker 1: That's Annsley Stokes, the realtor who works in the Washington

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Speaker 1: DC area.

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Speaker 4: The higher the absorption rate, the stronger the market is

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Speaker 4: from a seller's perspective. So we've seen that absorption rate

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Speaker 4: kind of steadily fall off since the beginning of the year,

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Speaker 4: and it has largely dovetailed with the election and with

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Speaker 4: all of the changes coming down from the federal government.

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Speaker 1: Cuts to staffing in Washington hit the DC area especially

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Speaker 1: hard with its high population of federal government employees, but

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Speaker 1: the rest of the US felt the impacts of the

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Speaker 1: new administration's policies too.

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Speaker 5: Buyers, they're up against worsening affordability, but in the background,

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Speaker 5: there's also uncertainty with the trade war and just the

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Speaker 5: overall economic situation, federal layoffs, layoffs in the tech industry.

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Speaker 1: Darryl Fairweather is the chief economist at Redfin.

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Speaker 5: A lot of buyers aren't feeling like now is the

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Speaker 5: right time to commit to a really big purchase.

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Speaker 1: The median home price in America was over four hundred

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Speaker 1: thousand dollars in April, and mortgage rates have been hovering

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Speaker 1: around six point eight percent for much of this year.

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Speaker 5: Home sales are near record lows, and that's because there

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Speaker 5: are so few buyers out there.

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Speaker 1: If fewer sales are happening. You'd think sellers might bring

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Speaker 1: down prices to help attract buyers. Is that happening.

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Speaker 5: Well, instead of bringing down prices, sellers are just like

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Speaker 5: kind of taking the ball and going home. They're staying

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Speaker 5: put instead of participating in the housing market. They don't

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Speaker 5: feel like it's worth it to lower their price because

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Speaker 5: if they were to re enter the market, they feel

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Speaker 5: like they couldn't afford to buy the same kind of

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Speaker 5: home that they're in.

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Speaker 1: Some of those would be sellers also locked in low

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Speaker 1: mortgage rates during the pandemic, Like per Shant.

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Speaker 3: I have a two point three percent mortgage rate.

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Speaker 1: Wow, I'm sure a lot of listeners would be jealous

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Speaker 1: to hear that.

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Speaker 3: To get me to get rid of that two point

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Speaker 3: three percent rate and take on you know wherever it

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Speaker 3: is now six point eighty five percent is not going

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Speaker 3: to be very easy. So for me to sell, I

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Speaker 3: have to really have a good reason to sell and

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Speaker 3: buy something else. It's called the mortgage lock in effect.

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Speaker 1: And Annsley, the DC realtor we heard from earlier, says

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Speaker 1: that cycle of sellers feeling locked in buyers having limited

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Speaker 1: options can be demoralizing for sellers.

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Speaker 4: Looking back, over the past, you know, five years, and

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Speaker 4: watching how quickly everything's sold, and it seemed like everybody

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Speaker 4: who listed a house got multiple offers and the sellers

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Speaker 4: got everything that they were looking for. And so now

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Speaker 4: all of the sudden sellers feel very beat up. They're

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Speaker 4: feeling very defensive. They think their properties are selling for

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Speaker 4: less than they should be, so that causes a lot

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Speaker 4: more friction in a transaction.

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Speaker 3: Sellers looked at this market and they said, wow, this

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Speaker 3: this kind of sucks.

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Speaker 1: So to paint a picture, prices are still high, mortgage

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Speaker 1: rates are still high, sales are way down, and new

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Speaker 1: listings are starting to retreat, and that's created sort of

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Speaker 1: this perfect storm.

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Speaker 3: Yeah, I think that's true. You know, there's certain reasons

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Speaker 3: why people have to sell in any economy, right if

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Speaker 3: you get a divorce, if you have a kid, if

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Speaker 3: you have to move for a job. Those people will

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Speaker 3: move no matter what's going on. But there are other

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Speaker 3: people who can choose to move or not move. Those

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Speaker 3: are the people who might be pulling back right now

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Speaker 3: in terms of listing their homes.

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Speaker 1: So what's going to thaw out the frozen US housing market?

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Speaker 1: That's after the break we've talked about what's keeping US

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Speaker 1: home buyers and sellers in a stalemate right now? High prices,

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Speaker 1: high mortgage rates, and a rocky economic outlook. But what

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Speaker 1: could turn things around, Bloomberg's Pishanko Paul says would be

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Speaker 1: buyers and sellers are holding out for one of those things,

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Speaker 1: in particular, to change mortgage rates.

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Speaker 3: A lot of people are talking about this magic six

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Speaker 3: percent rate, which you know, I don't know how true

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Speaker 3: that is. Maybe there is some magical rate that if

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Speaker 3: it drops below that, psychologically that's enough to get buyers

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Speaker 3: off the fence.

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Speaker 1: This week, the Federal Reserve chose to hold interest rates study,

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Speaker 1: which means mortgage rates likely won't change dramatically unless there's

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Speaker 1: a major shock to the economy. At the FED meeting

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Speaker 1: on Wednesday, when chair Jerome Powell was asked about what

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Speaker 1: his rate decision meant for the housing market, he pointed

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Speaker 1: to another issue beyond rates.

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Speaker 3: Yeah, we haven't built enough housing. This is not something

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Speaker 3: that FED can help with.

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Speaker 1: But then that'll be the case even after things normalize,

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Speaker 1: and Powell is right, even if mortgage rates do come down,

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Speaker 1: the US is still short some four point seven million homes.

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Speaker 1: According to zillo I, asked Daryl Fairweather at Redfinn about this.

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Speaker 1: What role does increasing housing supply and increasing that inventory

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Speaker 1: play in getting out of this stalemate.

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Speaker 5: Well, new construction is playing a much bigger role in

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Speaker 5: the market than it has, you know, in the last decade.

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Speaker 5: Because of the fact that there are so few existing

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Speaker 5: homes for sale, many people are turning to new construction.

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Speaker 5: In terms of new construction single family homes, those tend

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Speaker 5: to be the most expensive because they're brand new, They're

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Speaker 5: going to cost more, and for a first time buyer,

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Speaker 5: it's oftentimes like too big of a hurdle to go

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Speaker 5: straight to that new construction home. Most people choose starter

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Speaker 5: homes that are existing homes, But new construction of DNSE

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Speaker 5: housing like missing middle housing, like town homes duplexes, can

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Speaker 5: really do a lot to make that entry point more

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Speaker 5: viable for a first time buyer.

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Speaker 1: Some cities and states around the country are doing things

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Speaker 1: like loosening zoning restrictions to try and encourage construction of

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Speaker 1: that missing middle housing, essentially homes that are somewhere between

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Speaker 1: a single family home and a high rise building. And

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Speaker 1: there are efforts to address the housing crisis at the

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Speaker 1: federal level too, just This week, the Senate Banking Committee

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Speaker 1: advanced legislation meant to spur more housing development and make

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Speaker 1: it easier for Americans to access loans to buy and

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Speaker 1: repair homes. The bill will face House approval in the fall,

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Speaker 1: but Darryl says supply is always just one part of

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Speaker 1: the puzzle.

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Speaker 5: I think all of these solutions are going to be

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Speaker 5: really helpful. Part of the problem is is that with

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Speaker 5: high interest rates, it's really expensive to build that kind

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Speaker 5: of housing, and people have a lot of their equity

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Speaker 5: locked up in their homes. So if mortgage rates were

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Speaker 5: to fall, it could actually help development as well. So

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Speaker 5: that's one reason to hope for lower interest rates.

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Speaker 1: It can take time for these long term efforts to

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Speaker 1: pay off, for policy changes to pass, or for new

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Speaker 1: construction to break ground. In the meantime, the real estate

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Speaker 1: agents I spoke with are seeing their clients react to

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Speaker 1: the realities of the housing market as it stands now.

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Speaker 4: We're seeing a record number of price reductions from a

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Speaker 4: list price perspective, and then we're seeing additional price concessions

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Speaker 4: once negotiations start.

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Speaker 1: DC Area realtor Ansley Stokes says sellers are finally starting

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Speaker 1: to meet buyers where they're at for advice to those

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Speaker 1: sellers set realistic express patients.

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Speaker 4: Doesn't matter that a year ago that the similar house

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Speaker 4: sold for ten percent more. That is not the market today.

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Speaker 6: Everyone's used to the COVID market where you know, sellers

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Speaker 6: could put a house on the market and get anything

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Speaker 6: they wanted for it.

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Speaker 1: That's Christina Kipping, a real estate agent based in Tampa.

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Speaker 6: I just got a buyer under contract fully escated this morning,

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Speaker 6: and with them it was we weren't going out first

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Speaker 6: weekend making offers. That's not happening anymore. Buyers are looking

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Speaker 6: at house as if they like it, they may go

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Speaker 6: back two weeks later after they've done full on research

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Speaker 6: of the neighborhoods, the schools, you know, walkability. I just

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Speaker 6: say buyers are being a little bit more patient.

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Speaker 1: But not everyone can afford to take their time.

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Speaker 2: There's an old adage in real estate about all the

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Speaker 2: d's that drive real estate purchases.

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Speaker 1: Colin Wayne right from Nashville again.

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Speaker 2: You have death, divorced diapers, diamonds, debt. All of these

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Speaker 2: things are life events that drive the real estate industry

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Speaker 2: forward and make people need to have a change in

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Speaker 2: their housing needs. And so a lot of people who

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Speaker 2: had been sitting on the sidelines when the rates first

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Speaker 2: jumped up. They may have been able to wait for

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Speaker 2: a little while, but a lot of times those d's

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Speaker 2: can't wait anymore, and so the market has to turn forward.

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Speaker 1: This is the Big Take from Bloomberg News. I'm Sarah Holder.

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Speaker 1: Thanks for listening. We'll be back tomorrow.