Flashback to 1995: How the Housing Market Compares to Today
The real estate market has seen significant changes over the past three decades. A recent article by Jessica Lautz, "Flashback to 1995 in the Housing Market vs Today," highlights key differences between the housing market in 1995 and 2024. Let’s explore these shifts and what they mean for buyers today.
A Population Boom, but Fewer Home Sales
In 1995, the U.S. population was 266.6 million, compared to 341.1 million in 2024—an increase of 74.5 million people. Despite this growth, existing home sales in 2024 hit 4.06 million, the lowest annual pace since 1995, when they stood at 3.85 million. This decline can be attributed to limited housing inventory and affordability challenges.
Housing Inventory Then vs. Now
One major factor affecting home sales is inventory. In December 1995, 1.58 million single-family homes were available for sale. In contrast, December 2024 recorded just 1 million single-family homes, making it harder for buyers to find suitable options. Additionally, the months’ supply of homes decreased from 4.8 months in 1995 to 3.7 months in 2024, reflecting a tighter market.
Home Prices and Mortgage Rates: A Stark Difference
In 1995, the median home price was $114,600 (about $241,000 when adjusted for inflation). By 2024, home prices skyrocketed to a record high of $407,500, making affordability a growing concern. Mortgage interest rates averaged 7.93% in 1995 but were slightly lower at 6.72% in 2024. However, the rising home prices still create hurdles for first-time buyers.
领英推荐
Housing Affordability and Income Challenges
Affordability has dramatically declined. In November 1995, the NAR Housing Affordability Index stood at 126.9 (above 100 indicates better affordability), while in November 2024, it fell to 99.0. The income required to qualify for a home jumped from $32,112 in 1995 (equivalent to $65,957 in 2024) to $103,824 in 2024. The percentage of income spent on a mortgage increased from 19.6% to 25.2%, reflecting the growing financial burden on buyers.
First-Time Buyers: Then vs. Now
In 1995, 42% of homebuyers were first-time buyers. By 2024, this share dropped to a historic low of 24%, primarily due to rising prices and affordability constraints. The average age of first-time buyers increased from 31 years old in 1995 to 38 in 2024, as younger buyers struggle to save for a down payment while managing modern financial burdens like student loans.
A Look Ahead: What’s Next for the Market?
Despite these challenges, 2025 is showing early signs of improvement. Home sales activity picked up toward the end of 2024, interest rates are lower than a year ago, and inventory levels are increasing. While affordability remains a concern, buyers may see more opportunities in the near future.
For a deeper dive into these insights, check out Jessica Lautz’s original article