Market Notes
Plain reading of the United States residential market — what is actually happening to rates, supply and prices, and what it means if you are transacting this year.
Rates and affordability
The dominant fact of the current United States housing market is the gap between the mortgage rate most existing owners hold and the rate a new buyer is quoted. A very large share of outstanding American mortgages were written when thirty-year fixed rates sat near historic lows. Those borrowers are, in effect, holding an asset — a cheap loan — that they lose the moment they move.
That matters more than the headline rate itself. Affordability is a function of monthly payment, not purchase price, and a two to three point difference in rate moves the payment on a median-priced home by hundreds of dollars a month. It is why transaction volume can stay weak even where prices are flat or falling: the constraint is not willingness to buy but capacity to pay monthly.
Supply and the lock-in effect
The same mechanism suppresses supply. An owner who would otherwise trade up stays put, because moving means surrendering a cheap loan for an expensive one on a larger balance. Economists call this the lock-in effect, and it is the clearest explanation for why inventory has stayed historically tight through a period of weak demand — a combination that would be contradictory in a normal cycle.
Two things loosen it: rates falling far enough that the trade-up maths works again, or life events that override the maths entirely — job relocation, divorce, death, a growing family. The second category never stops, which is why there is always some supply regardless of conditions, and why patient buyers do find opportunities in frozen markets.
What the NAR settlement changed
The 2024 settlement of the National Association of Realtors commission litigation produced the most significant change to American brokerage practice in decades. Two provisions matter to anyone transacting now:
- Offers of compensation are no longer published on the MLS. A seller may still contribute to a buyer's agent's fee, but it is negotiated rather than advertised through the listing system.
- Buyers must sign a written representation agreement before touring a home. The agreement must state what the agent will be paid and who pays it.
The practical effect is that commission is now visibly negotiable, and buyers are confronting a cost that was previously bundled invisibly into the price. Our position on fees, and on disclosure of any compensation we receive from any source, is set out in Licensing & Disclosures.
Insurance as the new affordability problem
For a growing number of American markets, the binding constraint on affordability is no longer the mortgage — it is the homeowner's insurance premium, and in some places whether cover is available at all. Carriers have withdrawn from or sharply repriced wildfire-exposed, hurricane-exposed and flood-exposed markets, and state-backed insurers of last resort have grown substantially as a result.
If you are buying in a coastal, wildland-interface or flood-prone area, obtain an actual insurance quote before you remove contingencies, not an estimate. We have seen transactions fail at the last moment because a premium came in at several times the figure assumed in the buyer's budget. Check the FEMA flood designation, ask whether the property has an open claim history, and ask the carrier directly whether they are still writing new business in that ZIP code.
Regional divergence
National averages conceal more than they reveal. The United States is not one housing market; it is hundreds, moving independently. The Northeast corridor, where we are concentrated, behaves very differently from Sun Belt metros that built aggressively through the last cycle. Markets that added substantial new supply have seen the sharpest price adjustments; supply-constrained Northeastern markets have held value far better but transact at much lower volume.
Treat any national statistic as a starting point for a question rather than an answer. The number that matters is what comparable homes in your specific neighbourhood actually closed at in the last ninety days — which is the number we will show you.
What this means for you
If you are buying
Negotiating power is better than it has been in years in most markets. Ask about seller concessions and rate buydowns, which sellers often prefer to a headline price cut. Budget insurance properly. Do not waive inspection.
If you are selling
Price to the last ninety days of closed comparables, not to the peak. The first three weeks carry most of your buyer attention; a property priced to be reduced later usually transacts below where it would have had it been priced correctly at launch.
If you are waiting for rates
Consider that a rate cut improves affordability for every buyer simultaneously, which tends to push prices up. Lower rates do not reliably mean a cheaper purchase. You can refinance a rate; you cannot renegotiate a price after closing.
If you are relocating
Understand that your equity does not travel at constant value. Strong equity in a supply-constrained Northeastern market buys differently in a Sun Belt metro than it did three years ago, in both directions.
How we write this
These notes reflect our own reading of publicly available data and what we see in our own transactions. They are general commentary, not personalised financial, investment, tax or legal advice, and they are not a forecast of any particular outcome. Your circumstances are specific; get advice that is too.