Homebuyer sentiment has plunged to multi-decade lows, with 82% of Americans seeing late 2024 as a poor time to purchase a home, according to Reventure Consulting. The pessimism edges out even the early 1980s housing market when mortgage rates reached 18%.

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Mortgage applications reflect the negative outlook, falling 50% below pre-pandemic levels and marking their sixth consecutive weekly decline, according to the Mortgage Bankers Association (MBA). The latest weekly survey shows a 10.8% decrease in overall application volume, with purchase activity dropping to its lowest point since mid-August.

“Buyers are out. And have been out the last 18 months,” said Reventure CEO Nick Gerli, pointing to a “massive standoff” between buyers and sellers. “But sellers don’t care. They are still pricing their houses very high, leading to the worst market for transactions in decades.”

Rising interest rates continue driving the decline. 

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The average 30-year fixed mortgage rate climbed to 6.81% last week, its highest since July. Jumbo loans saw even steeper increases, reaching 6.98% from 6.77% the previous week.

“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates,” Joel Kan, MBA’s Vice President and Deputy Chief Economist, said in a press release. The impact goes beyond purchases, with refinancing activity falling to its lowest since May.

Gerli identified a psychological barrier in home prices as a key factor suppressing demand. “People don’t really care about marginal swings in mortgage rates. They also don’t really care that their income has grown the last five years,” he said on X, formerly Twitter.

“They are still stuck on the fact that a house that looks like it should be $400k is priced at $600k. And they can’t get over it,” he noted.

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However, according to Gerli, the market may be approaching a turning point as inventory levels near pre-pandemic norms. National active listings now sit just 21% below pre-pandemic figures, with some markets exceeding their previous benchmarks.

That inventory growth could pressure sellers to adjust prices, particularly as buyer sentiment remains at historic lows.

Recent data shows affordability concerns outweigh traditional market dynamics. Even with rising incomes and rate fluctuations, the negative sentiment has exceeded levels historically associated with similar affordability metrics, suggesting a shift in buyer psychology regarding home valuations.

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