Lindsey Vogel has been wanting to buy her first house since February of this year. She hasn’t had any luck.
In Burke Center, Virginia, where she is actively searching, Vogel hasn’t found anything that would convince her to close the deal. That’s despite attending at least one open house every week, she said.
“These are very small choices. There just isn’t a lot of inventory,” Vogel, a 34-year-old electrical designer at an energy company, told Yahoo Finance in an interview.
Another problem is mortgage interest rates, which have hovered above 6% over the past month – a far cry from the ultra-low interest rates we saw early in the pandemic.
“I’m waiting for rates to drop significantly. I wanted to see what’s out there and get a good idea. I’m willing to buy if the right thing comes my way [in terms of] location and price, but it just didn’t happen,” she said.
Many aspiring homeowners like Vogel remain on the sidelines of the housing market, deterred by high borrowing costs, record home prices and a lack of supply. While the housing market is showing signs of life in some of the country’s most expensive regions, there has yet to be a widespread recovery. Sales in the existing home market fell to the lowest level since 2010 in September, according to the National Association of Realtors (NAR).
In the meantime, the housing market has remained consistently out of reach for many first-time buyers. Last month, entry-level buyers accounted for 26% of transactions in the resale market, matching the all-time lows of August 2024 and November 2021, according to NAR data.
Morgan Stanley housing strategist Jim Egan explains that one of the remaining pressures is the “lock-in effect,” where homeowners delay a move because they secured their mortgages at lower rates during the early part of the pandemic. This trend has limited the supply of housing on the market.
Egan said current mortgage rates are 2.5 percentage points higher than the interest most homeowners pay on their existing loans. According to Morgan Stanley’s findings, more than 80% of borrowers have mortgage rates that are lower than current rates.
“We are still quite far away from tariffs that unlock significant supply,” Egan added.
House hunters may not get much more relief in the near term, according to Goldman Sachs research analyst Vinay Viswanathan. The Federal Reserve cut interest rates by half a percentage point in September. But there is “limited room” for further big declines, the analyst noted.
