Residential Brokers & Property Managers NAICS 531311, 531210

Apr 14, 2025 - Housing Markets Diverge on Geography

• The US housing market is increasingly defined by location, according to recent reporting by The Wall Street Journal. In some markets in the Northeast, demand is strong, and the available housing supply is tight. Land availability and zoning restrictions challenge building new supply in the Northeast. Parts of the Sunbelt have seen a building boom, but buyer interest is weakening. To attract buyers, some builders are offering incentives. According to a March survey by real estate consultancy John Burns, 78% of real estate agents surveyed in Southern Florida said existing homes on the market outnumber buyers. The same survey showed that 81% of real estate agents in the Northeast said buyers outnumber sellers. Some markets that grew the fastest over the past few years are seeing the most significant slowdowns. Broader weakness in the US housing market could be a drag on the overall economy.
• In an April report, National Association of Home Builders analysis of US Census Bureau data showed that nearly half of owner-occupied homes were built before 1980. In 2023, the median age of owner-occupied homes reached 41 years, up from 31 years in 2005. Median home age has increased since the Great Recession when new housing production dropped dramatically. Since then, home building activity has not kept pace with demand. As they age, US homes require more maintenance and repairs, driving remodeling spending. The lock-in effect of low mortgage rates during the pandemic is also prompting homeowners to renovate rather than move and face a higher interest rate.

• Higher home prices could weaken demand for new homes, as a lack of affordability was a significant headwind for the US housing market before tariffs added additional uncertainty, according to ABC News. On April 9, the Trump administration paused its reciprocal tariff agenda for 90 days for most countries but left in place a baseline 10% import duty on all countries except China, which faces total tariffs of 145%. Canada and Mexico are not subject to the new 10% baseline tariffs, and goods trading under the US-Mexico-Canada Agreement will remain duty-free. Key home-building materials, including gypsum from Mexico and Canadian lumber, avoided additional levies. However, tariffs are expected to increase prices for other housing inputs, including steel, aluminum, copper, and home appliances. Before Trump’s tariff pause, a UBS analyst estimated that reciprocal tariffs could add about $6,400 to the cost of building the average house.
• Tight lending conditions and high interest rates have weakened demand for new home construction loans. In the fourth quarter of 2024, the volume of outstanding residential acquisition, development, and construction (AD&C) loans made by FDIC-insured institutions declined for the third quarter in a row, according to the National Association of Home Builders (NAHB). The value of residential AD&C loans in Q4 2024 fell 1.02% to $490.7 billion compared to Q3 2024. Construction loans for single-family homes and townhomes fell for the seventh consecutive quarter in Q4 2024.