Aspiring home owners have been waiting anxiously for the market to thaw, but while home sales rose in August, one firm thinks the market is likely to be stuck in the "dark ages" for a while still.
Economic intelligence firm Pantheon Macroeconomics recently laid out why it doesn't see a housing market renaissance on the horizon.
Senior US economist Oliver Allen said that he sees three reasons not to expect a revival of the market, even as some recent signs suggest the yearslong freeze may be over:
- "Stretched" housing affordability
- Consistently high mortgage rates
- A struggling labor market
The US housing market spent much of 2025 in a gridlock, with aspiring buyers unable to purchase a home and sellers refusing to cut prices, opting to simply take their homes off the market rather than agreeing to a lower sale price.
In August, new home sales rose to a three-year high, prompting speculation that the market might finally be starting to thaw. However, Allen maintains that economic conditions are still too tough for the momentum to increase further.
"Significant headwinds remain in the form of stretched affordability, still-high mortgage rates, and a very weak labor market," he said. "A serious and sustained housing market recovery is unlikely anytime soon."
With the Federal Reserve cutting interest rates again on Wednesday, and expectations of more cuts to come, some market commentators have suggested that the housing market could be primed for a renaissance.
"The drop in the average 30-year rate on a new mortgage—to just 6.30% last week, from nearly 7% in late May—indicates that sales will rise a bit further over the next few months," Allen said. He added, though, that recent positive data points don't mean the market is poised for recovery.
"Housing market activity, however, remains very depressed despite the recent signs of improvement," he said, "with pending sales still roughly 30% below their average pre-pandemic level."
