Housing Market Won’t Budge Until at Least 2026

The U.S. housing market is "stuck," and there’s no clear path to relief until at least 2026 or beyond, according to Bank of America’s Michael Gapen.

In an interview with CNN, Gapen, head of U.S. economics at Bank of America (NYSE:BAC), explained that home prices will stay high—or even rise further—while inventory remains tight. Even if the Federal Reserve eventually cuts interest rates, mortgage rates aren’t expected to drop significantly.

Gapen emphasized that the housing market’s challenges will take years to resolve, with no quick solution in sight. He noted that first-time homebuyers should prepare for a prolonged period of limited options and high prices, making the process both frustrating and demanding of patience.

Adding to the market’s stagnation is an unusual economic dynamic. Typically, when mortgage rates rise, home prices fall, but in this case, both have increased simultaneously.

The lack of inventory is being fueled by homeowners who are reluctant to sell, a trend that is further restricting supply. Gapen pointed out that many homeowners see little incentive to sell, as they would be trading a low mortgage rate for a significantly higher one. With home prices continuing to rise, many are choosing to stay put rather than take on the financial burden of a new purchase.