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The U.S. housing market is facing significant challenges, primarily driven by a shortage of homes rather than just volatile mortgage rates, according to Zillow CEO Jeremy Wacksman. The market is short by an estimated 4.5 million homes, with regulatory barriers and local development challenges further hindering supply, The Wall Street Journal reports.
The affordability crisis stems from a lack of available homes, a situation worsened by years of underdevelopment following the Great Recession and a pandemic-era buying spree that inflated prices. While high mortgage rates have discouraged homeowners from selling, Zillow’s economists predict a slight increase in home sales and modest price appreciation in 2025. However, even if interest rates decrease, limited housing supply could drive prices higher, offsetting any affordability gains. More significant rate cuts would be needed to significantly stimulate the mortgage market.
