How the pandemic transformed the housing market in 5 years
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The pandemic upended America's housing market, delivering wins for homeowners and roadblocks for those still dreaming.
Why it matters: Sky-high home prices, elevated mortgage rates and a shortage of houses for sale are pushing homeownership out of reach for many.
In the past five years, here are five ways the market transformed and what could come next.
1. Home prices skyrocketed
Cheap borrowing costs and remote work unleashed a homebuying frenzy early in the pandemic — and sent prices soaring.
By the numbers: The median U.S. home price in January was $418,000, up around 45% from $289,000 five years ago, according to Redfin.
- Those who own their houses sit on a mountain of wealth.
The big picture: A stubborn housing shortfall is keeping prices high, even as buyers have retreated, with 2024 sales hitting a nearly 30-year low.
2. Rates surged, buyers stalled
Mortgage rates surged after falling to the lowest levels on record in 2021.
- Higher monthly payments are sidelining many home shoppers, especially first-timers.
What we're hearing: "It's very sad to be priced out of our communities," says Kylie Carpenter, a Seattle teacher who tells Axios it feels almost impossible to buy a house nearby.
Between the lines: Rates are now hovering near 7% and are unlikely to drop much soon, experts say.
In pricey Portland, Oregon, aspiring homebuyer Jake Turner tells Axios this year actually feels like a good time to jump in since there's less competition.
- "My wife and I will just buy less of a home with 20% down and work responsibly with the expensive housing payment."
3. Inventory dried up
Those who scored ultra-low mortgage rates during the pandemic are hesitant to sell, locking up supply.
Yes, but: That's starting to change as homebuyers adjust to higher rates.
- Roughly 83% of U.S. homeowners with mortgages have a rate below 6%, down from around 88% a year ago, according to a recent Redfin analysis.
- And in 15 of the 50 largest metro areas, including Denver, San Antonio and Dallas, inventory in February topped pre-pandemic norms, per Realtor.com.
What they're saying: "This is my forever home," says Ben Kolb, one of many homeowners who refinanced when rates dropped.
- A retired veteran with a disability, Kolb tells Axios he "would never be able to afford" the mortgage on his Columbia, Missouri, house if he bought it now.
- In suburban Minneapolis, Mark and Joann Shockey say they're glad they sold when the market was hot, downsizing to a townhouse and nabbing "a very small 10-year mortgage at a low rate."
Others feel stuck. The benefit "of having an affordable mortgage has locked us out of even considering selling and moving closer to where we both work" in Seattle, says Sean Bucknam, who moved to Tacoma with his wife as remote setups took off.
- Now, she's being called back into the office.
4. Builders ramped up, then pulled back
Buyers flocked to newly built homes, searching for options and deals, too.
- Construction boomed in parts of the South and Sunbelt, helping to cool competition and runaway prices.
Reality check: Homebuilding has slowed since then, partly due to elevated interest rates and steep construction costs.
What we're watching: Builders have warned that President Trump's pledged tariffs (some that have since been paused) on imports could make construction more expensive and drive up home prices.
Meanwhile, mayors across the country are sounding the alarm about the housing crunch.
- Several have pushed to loosen construction restrictions, despite some proposals sparking local backlash.
What we're hearing: "The big concern in the housing market today is cooling new construction," Zillow senior economist Orphe Divounguy tells Axios.
5. Cash-rich people jumped in
Cash buyers, many of them investors, snapped up homes at record speeds during the pandemic.
The latest: They've taken a step back, though the share of purchases made in cash remains historically high.
- It fell to just under one-third in 2024, the lowest since 2021, Redfin research shows.
The bottom line: Wealthier people are those most likely to buy homes in this expensive housing market.
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