Why Buying a Home Feels Impossible Right Now And What You Should Actually Do About It
If you’re feeling priced out of the housing market, you’re not alone—and you’re not imagining it. After years of skyrocketing prices, the market is finally showing signs of slowing. But that doesn’t mean it’s become any more affordable. In fact, it might be harder than ever to buy a home right now. I’ve been digging into the data from Morgan Stanley, Bank of America, and Redfin, and here’s what you really need to know.
First, let’s talk numbers. The median home price in the U.S. has dropped about 6% since 2022—from $442,000 to $416,000. That sounds like good news, right? Not so fast. Prices are still up 27% from 2020 levels. And with mortgage rates jumping from 3.5% in 2020 to between 6% and 12% today, your monthly payment for the same house has nearly doubled. What used to cost $1,200 a month could now cost $2,100 or more—even with a price drop.
That’s a massive affordability problem. And it’s freezing buyers in their tracks. Redfin says there are now 33.7% more sellers than buyers—the biggest gap since 2013, right after the Great Financial Crisis. Why? Because buyers are either priced out or waiting for rates to come down. Meanwhile, sellers are finally listing again, no longer holding out for a magic return to 3% mortgages.
On top of that, new construction is adding more inventory than the market can absorb. In fact, 2025 has seen the highest number of unsold new homes in 15 years. Builders are finishing projects, but buyers aren’t biting. That mismatch is pushing prices downward in many markets, especially in states like Florida and Texas, while places like Michigan and Ohio remain more stable.
Looking back, it’s easy to see how far we’ve come. In the 1970s, a home cost about 2.5 times the average annual income. Today, it’s over five times. Even with two-income households, that’s a tough hurdle. And the Federal Reserve isn’t helping—yet. They’ve kept interest rates high to fight inflation. Unless they begin cutting rates in late 2025 or 2026, don’t expect mortgage relief anytime soon.
What’s driving mortgage rates higher isn’t just Fed policy—it’s also rising Treasury yields. Banks compare what they earn lending to people versus what they earn from risk-free Treasury bonds. When bond yields rise due to concerns about inflation, tariffs, or political instability, so do mortgage rates.
So what should you do? My advice is simple: buy a home you can afford, not one you hope will go up in value. Your house is not an investment—it’s an expense. If you want to build wealth, look at rental properties, the stock market, or your own business. Timing the housing market rarely works, but preparing your finances always does.
Where the market goes next will depend on what the Fed does, how Treasury yields behave, and whether demand rebounds. Until then, be smart, stay informed, and don’t let the headlines pressure you into a bad deal. Your future self will thank you.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
