After years of soaring prices and stalled sales, the U.S. housing market is showing early signs of a reset as affordability begins to improve, according to a leading real estate economist.
Housing Affordability Improves As Home Prices Level Off
Mike Simonsen, chief economist at residential brokerage Compass, told CNBC that the housing market is entering a new phase after years of punishing affordability.
High prices and elevated mortgage rates sidelined buyers, while sellers struggled to find offers at their desired levels.
"In the next era, that story flips," said Simonsen.
"Sales are starting to move higher, but prices are capped or maybe down. Incomes are rising faster than prices, and so affordability improves for the first time in a bunch of years."
Rising Delistings Signal Pent-Up Demand In Housing Market
As buyers pulled back, more sellers removed homes from the market.
Listing withdrawals jumped 47% in June from a year earlier, a sign of growing frustration on both sides of the transaction.
Simonsen said many of those withdrawn listings represent "shadow demand," referring to homeowners who want to move but need to sell their current home first.
He estimated that about 150,000 owners have delayed moves for several years and could re-enter the market if conditions improve.
Simonsen does not expect mortgage rates to fall sharply, cautioning that a steep decline could reignite demand and drive prices higher.
Instead, he expects rates to remain in the low-6% range, supporting higher sales while keeping home prices in check.
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US Housing Market Sees Rare Price Flip
Last month, the U.S. housing market saw a rare shift as average prices for new single-family homes fell below existing-home prices for the first time in 54 years.
Analysts called it a sign of deeper structural problems, noting that new homes had historically sold at a premium due to modern features and limited supply.
Three years ago, new homes were about 10% more expensive, and premiums reached 40% in 2012, highlighting the dramatic reversal.
In the same month, the Trump administration focused on lowering living costs, citing declines in housing and food prices.
Agriculture Secretary Brooke Rollins noted egg prices fell 86% over roughly 10 months, and housing costs dropped nearly 14% since Trump took office.
Yet other staples, like beef and bacon, continued to rise, keeping overall inflation at 3%, above the Federal Reserve's 2% target.
These shifts underscored both unusual movements in the housing market and ongoing efforts to ease financial pressures for American households.
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