In February, mortgage rates fell below 6% for the first time since 2022, and for a moment raised hopes of a rebound in the housing market. Borrowing costs had been on a steady decline up to that point, releasing pent-up demand as the Federal Reserve cut its benchmark rate. That momentum has since stalled, however, as the central bank holds rates steady amid growing economic uncertainty tied to the conflict in the Middle East. By March, sales of both existing and new homes had cooled to below their year-end pace heading into what is traditionally the market’s busiest season.
In this Economics Weekly, Richard de Chazal examines the U.S. housing market and discusses its opportunities and challenges in the year ahead.