The housing market's long winter faces a slow thaw and many unknowns
A slew of new data shows that the housing market remains largely frozen at the start of the year, posing steep challenges to President Donald Trump's promise to thaw it.
Sales of existing homes fell 4.9% from December to January, the National Association of Realtors reported Friday, a steeper drop than expected. Though the rate improved 2% last month on an annual basis, the sales pace continues to hover around 15-year lows.
The situation isn't much rosier for new builds: Construction permits declined 1.7% in January from 12 months earlier, while housing starts were mostly flat, federal data showed Wednesday. And homebuilders' confidence slipped to a five-month low this month, the National Association of Home Builders' latest survey found.
Meanwhile, homebuying remained very difficult at the end of 2024, driven by economic instability, rising costs and shortages of homes on the market, according to NBC News' Home Buyer Index, which measures the challenges potential buyers face county by county.
The current outlook reflects the collision of long-running trends — tight, if improving, inventories; steep prices; high interest rates — with fresh uncertainties posed by Trump's economic agenda, including tariffs and mass deportations that threaten to drive up costs.
'It's been a very unusual start to 2025. A lot of buyers and sellers were thinking this was going to be their year,' said Lisa Sturtevant, chief economist at Bright MLS housing group.
Instead, she said, many listings are staying on the market longer as buyers wait for stubborn mortgage rates to fall.
'It's going to be a slower spring than we hoped it would be,' Sturtevant predicted.
On the campaign trail, Trump promised mass deportations of undocumented people to free up existing properties, deregulation to spur more development and tax incentives to help first-time home buyers. He also pledged to slash mortgage rates 'very fast.'
'We will drive down the rates so you will be able to pay 2% again and we will be able to finance or refinance your homes drastically at much lower costs,' Trump told Arizona rallygoers in September, estimating he would save families in the state $800 to $1,000 in monthly mortgage payments.
But nationwide, rates for 30-year fixed mortgages — the most popular type — have hovered from 6% to 8% for the last two years, and demand for mortgage applications recently fell to its lowest level in six months.
Since the election, several major builders have warned Trump's proposals could crimp their business. The higher tariffs he's already unveiled on steel and aluminum, set to take effect next month, and new ones on Chinese goods that are already in force could add thousands of dollars to home prices, industry executives say.
'Whether it's steel or any of the other tariffs relative to our friends to the north or to the south, we do expect some cost pressure from some of that,' said Curt VanHyfte, CFO of the homebuilding firm Taylor Morrison, on a Feb. 12 earnings call. But he added that those wouldn't affect the company until late 2025 if fully implemented.
Lennar, another major homebuilder, said it made a 'major shift' eight years ago away from materials manufactured in Asia during Trump's first-term trade war with China. Levies on Chinese electronics components used in residential construction could make the average property $5,000 to $7,000 more expensive, Lennar co-CEO Jon Jaffe told investors in December.
The potential impact of immigration policy changes would be 'much more difficult to assess,' he said.
Some economists argue that tighter immigration enforcement slows construction, drives up home prices and even fuels job losses among the industry's American-born workers. Home builders who spoke to NBC News in the final leg of the presidential race said that any dent to their heavily foreign-born workforce, which is already facing shortages, would be detrimental. But many weren't sure at the time how far Trump might go. So far, his new administration has seen an early frenzy of arrests and deportations that are now running up against resource limits, much to the president's frustration.
In a statement, White House spokeswoman Taylor Rogers said the president had 'cut red tape' and taken executive action calling for lower housing costs and expanded supply.
'Americans trust President Trump to fix the housing crisis left behind by Joe Biden,' Rogers said.
Despite the unknowns weighing on the housing market, Redfin Chief Economist Daryl Fairweather advised buyers wary of high prices to consider new builds, adding that many developers are offering incentives.
While inventories are picking up, there's still only about 3.5 months' supply relative to current sales levels, far off the six-month level reflective of a balanced market. Nearly 73,000 homes were delisted in December, a 64% increase from the previous year, a recent Wall Street Journal analysis of CoreLogic data found.
Still, JPMorgan analysts said last week that new homes for sale hit 481,000 — the most since 2007 — and speculative properties built without buyers lined up reached 385,000, the most since 2008. There are about 20% more existing single-family homes for sale now than a year ago, the researchers said, 'but the numbers remain near record lows, around 20-30% below prior troughs.'
With supply at least trending in the right direction, Fairweather said buyers who stay flexible can put themselves in a good position to act this year. She advised monitoring mortgage rates, in order to move fast if they drop, and getting preapproved for a home loan.
'You have more negotiating power now compared to last year, and there are more homes to choose from,' she said, 'so there is no need to accept the terms of a stubborn seller.'
Real estate agents in some high-demand areas are voicing measured optimism.
When NBC News spoke in October with Bob Clarkson, a Century 21 agent in Atlanta, he was seeing competition for homes plunge in much of the metro area. Now, he said, interest is rising again, but 'buyers are just picky.'
'I have six to 10 buyers that have been looking, some of them even six months,' he said. 'We've looked at 30 houses, and it just hasn't been the right fit.'
He chalked that up to broad 'uncertainty in the market' as well as the costs of fixes and renovations, which have many buyers balking even at properties they like.
'To move into an $800,000 house and still need to update the bathrooms, and still need to update the kitchen, that doesn't even include stuff like windows or HVAC or roof,' Clarkson said. 'The affordability factor is long gone.'
Even so, he expects the spring buying season to be 'more productive, barring something dramatic happening in the White House.'
There's frustration on the other side of the equation, too, said Makeba Evans, an Atlanta real estate agent who's recently begun focusing on sellers: 'The price that they want for their home is not rational, so it's taking a lot longer.'
Chicky Johnson, a Re/max agent who's served the Chicago suburbs for more than three decades, urged patience. 'What I see is a shifting, but at the same time somewhat of a stabilization coming,' she said, adding tariffs remained a wild card in her ability to put clients in new homes this year.
Johnson said she saw a slight dip in sales late last year, partly due to a historic settlement that shook up commission rules and raised incentives for buyers to forgo brokers. More recently, though, she said buyers and sellers are both getting tired of waiting for mortgage rates to fall and are beginning to come out of their holding patterns.
'Instead of it being so lopsided and having not enough inventory and too many buyers, which was creating this multiple-offer overbidding,' she said, 'I think we have kind of a coming-to-grips.'
This article was originally published on NBCNews.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Axios
27 minutes ago
- Axios
Amid backlash, Tesla remained resilient in Texas
Even as Tesla deliveries plunged nationally this year amid Elon Musk's very visible (if short-lived) alliance with President Trump, there was at least one state where Tesla registrations were up: Texas. Why it matters: The registration data, obtained by Axios through public information requests, indicates loyalty to the brand in its home base, including Texas' large urban and suburban counties. The depth of conservatives' enthusiasm for Musk's automobiles now faces a major test amid the absolute meltdown last week between the Tesla CEO and the president. By the numbers: Texans registered 12,918 new Teslas in the first three months of 2025, a period when Musk, who contributed more than $250 million to a pro-Trump super PAC during the 2024 election campaign, was enmeshed in the Trump administration as the overseer of DOGE, the president's cost-cutting initiative. Over the same period in 2024, Texans registered 10,679 Teslas. That's a 21% increase year over year. The intrigue: The spike in Texas registrations came as Tesla was flailing elsewhere. Tesla's vehicle deliveries plunged 13% globally in the first quarter of 2025 (336,681 electric vehicles) compared with Q1 2024 (386,810). Tesla vehicles were torched at showrooms and the brand's reputation cratered. Zoom in: Tesla saw year-over-year improvements in its sales in some of the most populous Texas counties. In Travis County, new Tesla registrations grew from 1,369 in the first quarter of 2024 to 1,424 during the first quarter of 2025. In Harris County, they grew from 1,526 to 1,837 during the same period. Tesla registration grew from 1,316 to 1,546 in Collin County and from 990 to 1,146 in Dallas County. In Bexar County, registrations grew from 631 to 664. What they're saying:"It's homegrown pride," is how Matt Holm, president and founder of the Tesla Owners Club of Austin, explains the car company's resilience to Axios. "And regardless of all the drama going on these days, people can differentiate between the product and everything else going on, and it's just a great product." "Elon has absolutely and irreversibly blown up bridges to some potential customers," says Alexander Edwards, president of California-based research firm Strategic Vision, which has long surveyed the motivations of car buyers. "People who bought Teslas for environmental friendliness, that's pretty much gone," Edwards tells Axios. Yes, but: The company had been enjoying an increasingly positive reputation among more conservative consumers. Musk was viewed favorably by 80% of Texas Republicans polled by the Texas Politics Project in April — and unfavorably by 83% of Democrats. In what now feels like a political lifetime ago, Trump himself even promoted Teslas by promising to buy one in support of Musk earlier this year. "In some pockets, like Austin, you have that tech group that loves what Tesla has to offer, can do some mental gymnastics about Musk, and looks at Rivian and says that's not what I want or might be priced out," Edwards says. Between the lines:"Being in the state of Texas, you're naturally conditioned to think you're better than everyone else in the U.S. And when you buy a Tesla" — a status symbol — "that's what you're saying. It doesn't surprise me that there's an increase in sales" in Texas, Edwards says. Plus: Tesla's resilience in Texas could have practical reasons as well, Edwards says. Texas homes — as opposed to, say, apartments in cities on the East Coast — are more likely to have a garage to charge a car in, he adds. What's next: Musk said late last month that Tesla was experiencing a "major rebound in demand" — without providing specifics. But that was before things went absolutely haywire with Trump and Tesla stock took a bath last week.
Axios
27 minutes ago
- Axios
The U.S.-China leverage game
Negotiations usually boil down to leverage — specifically, who has more of it. In the U.S.- China talks underway Monday in London, the question of who has the upper hand boils down to macro- versus micro-economics. The big picture: A slew of data out of China shows the massive cost that U.S. tariffs impose on the Chinese economy, reflecting both underlying economic weakness and what the nation stands to lose if no trade peace is reached. The U.S., meanwhile, has had a run of perfectly solid macroeconomic data, but has much to lose if China continues throttling supplies of rare earth minerals and other specific goods that U.S. industries desperately need. State of play: All is not well for the fundamentals of China's economy, and plunging trade with the U.S. exacerbated those problems. Chinese exports to the U.S. fell 34.5% in May from a year ago, according to Chinese National Bureau of Statistics data out Monday. Its imports from the U.S. also fell, by 18%. Consumer prices fell for the fourth consecutive month, the bureau said, while producer prices fell the most in nearly two years. The mix of moribund export activity and falling prices compounds the nation's challenges grappling with a property bust and debt overhang. Yes, but: That might make Chinese negotiators eager to make a deal. After all, the nation's leadership views maintaining stable economic conditions and good living standards as crucial for their own hold on power, and collapsing exports to the U.S. undermine that goal. But they have plenty of leverage of their own, tied to U.S. reliance on very specific Chinese exports. Reality check: China's power in this standoff is tied to its ability to restrict exports of rare earth minerals, certain electronics, and pharmaceuticals. By throttling a handful of export categories, China can potentially exact damage on the U.S. economy that's far larger than the dollar value of the lost trade flows. Adam Posen, president of the Peterson Institute for International Economics, argued in an influential essay this spring that this means China has "escalation dominance," the power to escalate or de-escalate according to its goals. What they're saying: "The United States gets vital goods from China that cannot be replaced any time soon or made at home at anything less than prohibitive cost," Posen wrote in Foreign Affairs. In the event of aggressive escalation, he wrote, the U.S. "will face shortages of critical inputs ranging from basic ingredients of most pharmaceuticals to inexpensive semiconductors used in cars and home appliances to critical minerals for industrial processes including weapons production." The intrigue: The Wall Street Journal reported Monday morning that President Trump has authorized his negotiating team to loosen export restrictions on jet engines and other products as part of the talks, citing people familiar.
Yahoo
30 minutes ago
- Yahoo
After vowing ‘90 deals in 90 days,' the White House's rhetoric runs into reality
Donald Trump clearly wants the public to believe he recently struck a trade deal with China. The president did not actually reach such an agreement, but he's leaned into his fictional narrative with great enthusiasm lately. Last Thursday, for example, the Republican published an item to his social media platform, noting that he'd spoken to Chinese President Xi Jinping about 'the intricacies of our recently made, and agreed to, Trade Deal.' Soon after, during an Oval Office event, he again touted the same 'trade deal.' A day later, Trump posted a follow-up item, announcing the members of a delegation who would travel to London to meet with Chinese officials about 'the Trade Deal.' The bad news is that the 'trade deal' in question does not exist, no matter how many times the American president pretends otherwise. The good news is that administration officials will actually have some discussions with their Chinese counterparts. NBC News reported: Senior U.S. and Chinese officials will meet in London on Monday in an effort to de-escalate the bitter trade dispute between the world's two biggest economies that has roiled the global economy, with China's restrictions on critical minerals high on the agenda. About a month ago, Trump announced what he characterized as a 'deal' with China, but the closer one looked at the details, the more the truth came into focus. Georgetown University professor Abraham Newman wrote a great piece for MSNBC that explained, "While the U.S. did avoid a major economic calamity, this is not a deal. The U.S. blinked. ... Far from some diplomatic coup, the U.S. climb down reflects the economic risks of maintaining such high tariffs.' The editorial board of The Wall Street Journal came to the same conclusion, noting, '[T]he China deal is more surrender than Trump victory.' Complicating matters, while the White House and Beijing reached a tentative agreement that paused the two countries' tit-for-tat tariffs, both countries have since accused each other of violating the agreement. All of which brings to mind Peter Navarro, the White House's top trade adviser, who boasted in April, 'We're going to run 90 deals in 90 days.' Navarro added that such a plan 'is possible' in part because 'the boss is going to be the chief negotiator.' Roughly two months later, the grand total currently stands at zero. Generous observers might be inclined to give Trump credit for striking a deal with the U.K., but as The Washington Post's Dana Milbank summarized in his latest column, that deal is really more of a 'vaguely phrased framework with Britain that still hasn't been made public.' What's more, a new Politico report added that a month after the agreement was announced, the U.S.-U.K. duties 'remain in place' and 'there is still no clear timeline for when they'll lift.' Or to put it another way, two-thirds of the way into the '90 deals in 90 days' vow, the White House appears to be 90 deals short. Undeterred, Navarro returned to Fox Business late last week, where he was asked when the public should expect to see some breakthroughs. 'We will have deals,' Navarro said. 'It takes time. Usually, it takes months and years. In this administration, it's gonna take more like days.' On average, the typical timeframe for a U.S. trade deal is roughly 30 months. That didn't deter Navarro from pushing the '90 deals in 90 days' talking point in April, and it apparently didn't stop him from claiming again last week that Team Trump will produce amazing results in a matter of days. The White House's top trade adviser should be going out of his way right now to lower expectations after already having set an impossibly high bar. For reasons unknown, Navarro is doing the opposite, setting up the Trump administration for additional failure. This article was originally published on
