The decade-long housing boom in the US is over, and the market has gone eerily quiet.

Buyers are clearing out, but so are sellers. And the real estate agents who served them during the pandemic housing frenzy now are left scrambling for listings, or exiting into fallback careers as deals plunge.

As home prices slide in the frothiest locations and the economy teeters on the edge of recession, inventory is staying tight, preventing values from falling faster. But the upheaval caused by soaring mortgage rates — a consequence of the Federal Reserve’s inflation-curbing campaign — has thrown the industry into turmoil with the market signaling leaner times ahead.

Sellers listed 24% fewer homes in October compared with a year earlier, the fourth straight month with a drop, according to data from Zillow. At the same time, purchases sank and are now 17% below their levels in October 2019, before Covid hit.

With a typical home now only affordable to someone earning more than $100,000, brokers are struggling to find buyers. And try convincing a homeowner to sell, especially if it means trading in a 3% mortgage for a much more expensive one. 

“This is Han Solo in carbonite: This is a market that could stay frozen for quite some time,” said Benjamin Keys, a real estate professor at the University of Pennsylvania’s Wharton School, referring to a character in the Star Wars franchise. “There really aren’t any forces to unthaw it in a rapid way.”

Read more: Housing Paralysis Engulfs US Buyers With Prices Starting to Fall

For the logjam to break, affordability has to improve, and that means a significant drop in either prices or rates. Borrowing costs have come down some after crossing 7% a few weeks ago, but they’re unlikely to fall much more in the near future, according to Mark Zandi, chief economist for Moody’s Analytics.

He expects prices to slip almost 10% from their June peak over the next two years — if the country avoids a full-blown recession. Even a moderate one, however, could push prices down twice as much, he said.

Pressure on Sellers
Homeowners holding back for now are hoping for a bigger decline in rates, which would make it easier to sell and cheaper to buy something else, according to Zandi. But divorces, job changes and children will keep coming, eventually leading to a steady increase in listings.

“Once the job market starts to turn — and it will — the pressure will intensify,” Zandi said of a potential economic downturn. “People will have to move.” 

Any new listings will compete with homes that are already languishing on the market. In places such as Phoenix, so-called active listings have been piling up since buyers started retreating.  

But the housing landscape is far different than it was after the 2008 financial crisis. Most of today’s homeowners are flush with equity from the decadelong increase in values. And 30-year, fixed-rate mortgages are the norm, allowing borrowers to ride out volatility.

Sellers could potentially remain on the sidelines for years if they have to, keeping the market stuck, according to Keys, the Wharton School professor. There are few eager buyers because many home purchases were pulled forward during the past couple years, so those who wanted to move to the suburbs are already there, he said.

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