Existing Home Prices Rise 2.1% Despite Supply Recovery

Existing home prices increased by 2.1% year-over-year according to FHFA data. This rise persists despite inventory levels returning to a near-balanced state of 4.9 months. The market has remained stagnant for four years. Annual sales have hovered near four million units. This duration matches the 2008 crisis period. However, the current economy is not in recession. The last comparable period without recession was 1993 to 1996. Population growth complicates direct comparisons. The federal government’s ROAD to Housing Act targets supply-side solutions. It assumes new construction will lower costs for existing homes. Existing homes represent 86% of all sales. New supply does not directly reduce the price of these older structures.

Supply Growth Fails to Lower Prices

Builders are cutting prices to move inventory. Homeowners are holding firm on asking prices. Fannie Mae and Pulsenomics polled over one hundred economists. They forecast national home price growth of 2% to 3% annually. This compounds to roughly 15% by 2030. The consensus indicates sustained appreciation. Homeowners view their property as an inflation hedge. This behavior locks in equity and prevents price corrections. The market is frozen by high equity levels. Sellers have no incentive to lower prices. Buyers face a gap between affordability and asking prices. The ROAD to Housing Act may not bridge this gap. It relies on macroeconomic shifts that are unlikely to occur. Legislators may be confusing personal assets with commodities.

Affordability Requires Impossible Economic Shifts

The ICE Mortgage Monitor report identifies three conditions for affordability. Mortgage rates must drop below 5%. Home prices must fall by 16%. Or household incomes must rise by 19%. None of these scenarios are currently probable. Sub-5% rates could trigger unhealthy appreciation. A 16% price drop erases $8 trillion in household equity. A 19% wage increase without productivity gains causes double-digit inflation. The industry waits for a macroeconomic miracle. This passivity ignores controllable costs. The focus remains on external factors rather than internal structures.

Guarantee Fees Triple Since 2009

Guarantee fees have risen significantly without legislative approval. In 2009, the average fee was 22 basis points. Today, it stands at 65.2 basis points. This increase occurred without a vote or referendum. Ten of these basis points do not price credit risk. Congress added these costs in 2010. The industry overlooks these internal costs. They are a direct drag on affordability. Fixing these fees is within current control. It requires political will rather than economic luck. The focus on wrong levers perpetuates the freeze. Addressing fee structures offers a tangible path forward. This approach bypasses the need for wage spikes or price crashes.