The average sales price of new homes in the United States experienced a slight decrease in 2024, dropping to 512,2000 U.S. dollars from the peak of 521,500 U.S. dollars in 2022. This decline came after years of substantial price increases, with the average price surpassing 400,000 U.S. dollars for the first time in 2021. The recent cooling in the housing market reflects broader economic trends and changing consumer sentiment towards homeownership. Factors influencing home prices and affordability The rapid rise in home prices over the past few years has been driven by several factors, including historically low mortgage rates and increased demand during the COVID-19 pandemic. However, the market has since slowed down, with the number of home sales declining by over two million between 2021 and 2023. This decline can be attributed to rising mortgage rates and decreased affordability. The Housing Affordability Index hit a record low of 98.1 in 2023, indicating that the median-income family could no longer afford a median-priced home. Future outlook for the housing market Despite the recent cooling, experts forecast a potential recovery in the coming years. The Freddie Mac House Price Index showed a growth of 6.5 percent in 2023, which is still above the long-term average of 4.4 percent since 1990. However, homebuyer sentiment remains low across all age groups, with people aged 45 to 64 expressing the most pessimistic outlook. The median sales price of existing homes is expected to increase slightly until 2025, suggesting that affordability challenges may persist in the near future.

The number of home sales in the United States peaked in 2021 at almost ************* after steadily rising since 2018. Nevertheless, the market contracted in the following year, with transaction volumes falling to ***********. Home sales remained muted in 2024, with a mild increase expected in 2025 and 2026. A major factor driving this trend is the unprecedented increase in mortgage interest rates due to high inflation. How have U.S. home prices developed over time? The average sales price of new homes has also been rising since 2011. Buyer confidence seems to have recovered after the property crash, which has increased demand for homes and also the prices sellers are demanding for homes. At the same time, the affordability of U.S. homes has decreased. Both the number of existing and newly built homes sold has declined since the housing market boom during the coronavirus pandemic. Challenges in housing supply The number of housing units in the U.S. rose steadily between 1975 and 2005 but has remained fairly stable since then. Construction increased notably in the 1990s and early 2000s, with the number of construction starts steadily rising, before plummeting amid the infamous housing market crash. Housing starts slowly started to pick up in 2011, mirroring the economic recovery. In 2022, the supply of newly built homes plummeted again, as supply chain challenges following the COVID-19 pandemic and tariffs on essential construction materials such as steel and lumber led to prices soaring.

House prices grew year-on-year in most states in the U.S. in the first quarter of 2025. Hawaii was the only exception, with a decline of **** percent. The annual appreciation for single-family housing in the U.S. was **** percent, while in Rhode Island—the state where homes appreciated the most—the increase was ******percent. How have home prices developed in recent years? House price growth in the U.S. has been going strong for years. In 2025, the median sales price of a single-family home exceeded ******* U.S. dollars, up from ******* U.S. dollars five years ago. One of the factors driving house prices was the cost of credit. The record-low federal funds effective rate allowed mortgage lenders to set mortgage interest rates as low as *** percent. With interest rates on the rise, home buying has also slowed, causing fluctuations in house prices. Why are house prices growing? Many markets in the U.S. are overheated because supply has not been able to keep up with demand. How many homes enter the housing market depends on the construction output, whereas the availability of existing homes for purchase depends on many other factors, such as the willingness of owners to sell. Furthermore, growing investor appetite in the housing sector means that prospective homebuyers have some extra competition to worry about. In certain metros, for example, the share of homes bought by investors exceeded ** percent in 2025.

The Landscape Services industry has navigated a volatile economic terrain, but has emerged as a net winner. After a downturn due to sluggish spending by commercial real estate clients and fierce competition for residential customers' disposable income, landscapers have reaped benefits from the burgeoning residential housing market. Residential markets have expanded despite the Bank of Canada's aggressive rate hikes aimed at curbing inflation. Recent rate cuts have further fueled spending on landscaping services, both from new housing developments and upgrades to existing homes. As a result, industry revenue is forecast to rise at a CAGR of 2.1% over the past five years to $14.6 billion, including growth of 1.9% in 2025 alone. Despite growth, landscapers have been hard hit by inflationary pressures, with the cost of equipment, fuel, materials and wages continuing to rise. The price of fertilizer, a key input for landscapers, who use it to treat lawns and keep other plants healthy and growing strongly, soared by more than 30.0% in 2021 and more than 50.0% 2022. Price increases this intense have forced landscapers to pass on costs to their customers, with more than three-quarters of landscapers raising prices in 2023 and 2024. While profit margins remain higher in 2025 than they were in 2020, they have been pressured by rising prices as landscapers have been weary about raising prices for fear of losing sales to competitors. Landscaping services will continue to grow steadily in the coming years as clients increasingly focus on sustainable designs in response to climate change. With the economy also expected to expand, commercial construction will look to incorporate extensive green spaces, while residential customers will remain a bedrock of the industry, with home construction and renovation projects benefiting from further interest rate cuts. As a result, industry revenue will increase at a CAGR of 1.9% to $16.1 billion over the five years to 2030.

Graph and download economic data for Average Sales Price of Houses Sold for the United States (ASPUS) from Q1 1963 to Q2 2025 about sales, housing, and USA.

This is not going to be an article or Op-Ed about Michael Jordan. Since 2009 we've been in the longest bull-market in history, that's 11 years and counting. However a few metrics like the stock market P/E, the call to put ratio and of course the Shiller P/E suggest a great crash is coming in-between the levels of 1929 and the dot.com bubble. Mean reversion historically is inevitable and the Fed's printing money experiment could end in disaster for the stock market in late 2021 or 2022. You can read Jeremy Grantham's Last Dance article here. You are likely well aware of Michael Burry's predicament as well. It's easier for you just to skim through two related videos on this topic of a stock market crash. Michael Burry's Warning see this YouTube. Jeremy Grantham's Warning See this YouTube. Typically when there is a major event in the world, there is a crash and then a bear market and a recovery that takes many many months. In March, 2020 that's not what we saw since the Fed did some astonishing things that means a liquidity sloth and the risk of a major inflation event. The pandemic represented the quickest decline of at least 30% in the history of the benchmark S&P 500, but the recovery was not correlated to anything but Fed intervention. Since the pandemic clearly isn't disappearing and many sectors such as travel, business travel, tourism and supply chain disruptions appear significantly disrupted - the so-called economic recovery isn't so great. And there's this little problem at the heart of global capitalism today, the stock market just keeps going up. Crashes and corrections typically occur frequently in a normal market. But the Fed liquidity and irresponsible printing of money is creating a scenario where normal behavior isn't occurring on the markets. According to data provided by market analytics firm Yardeni Research, the benchmark index has undergone 38 declines of at least 10% since the beginning of 1950. Since March, 2020 we've barely seen a down month. September, 2020 was flat-ish. The S&P 500 has more than doubled since those lows. Look at the angle of the curve: The S&P 500 was 735 at the low in 2009, so in this bull market alone it has gone up 6x in valuation. That's not a normal cycle and it could mean we are due for an epic correction. I have to agree with the analysts who claim that the long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. There is a complacency, buy-the dip frenzy and general meme environment to what BigTech can do in such an environment. The weight of Apple, Amazon, Alphabet, Microsoft, Facebook, Nvidia and Tesla together in the S&P and Nasdaq is approach a ridiculous weighting. When these stocks are seen both as growth, value and companies with unbeatable moats the entire dynamics of the stock market begin to break down. Check out FANG during the pandemic. BigTech is Seen as Bullet-Proof me valuations and a hysterical speculative behavior leads to even higher highs, even as 2020 offered many younger people an on-ramp into investing for the first time. Some analysts at JP Morgan are even saying that until retail investors stop charging into stocks, markets probably don’t have too much to worry about. Hedge funds with payment for order flows can predict exactly how these retail investors are behaving and monetize them. PFOF might even have to be banned by the SEC. The risk-on market theoretically just keeps going up until the Fed raises interest rates, which could be in 2023! For some context, we're more than 1.4 years removed from the bear-market bottom of the coronavirus crash and haven't had even a 5% correction in nine months. This is the most over-priced the market has likely ever been. At the night of the dot-com bubble the S&P 500 was only 1,400. Today it is 4,500, not so many years after. Clearly something is not quite right if you look at history and the P/E ratios. A market pumped with liquidity produces higher earnings with historically low interest rates, it's an environment where dangerous things can occur. In late 1997, as the S&P 500 passed its previous 1929 peak of 21x earnings, that seemed like a lot, but nothing compared to today. For some context, the S&P 500 Shiller P/E closed last week at 38.58, which is nearly a two-decade high. It's also well over double the average Shiller P/E of 16.84, dating back 151 years. So the stock market is likely around 2x over-valued. Try to think rationally about what this means for valuations today and your favorite stock prices, what should they be in historical terms? The S&P 500 is up 31% in the past year. It will likely hit 5,000 before a correction given the amount of added liquidity to the system and the QE the Fed is using that's like a huge abuse of MMT, or Modern Monetary Theory. This has also lent to bubbles in the housing market, crypto and even commodities like Gold with long-term global GDP meeting many headwinds in the years ahead due to a...

Mortgage interest rates in Spain soared in 2022, after falling below *** percent at the end of 2021. In the first quarter of 2025, the average weighted interest rate stood at **** percent. That was lower than the rate in the same period the previous year. Despite the increase, Spain had a considerably lower mortgage interest rate than many other European countries. The aftermath of the property bubble Before the bursting of the real estate bubble, the housing market experienced a period of intense activity. A context marked by economic growth, high employment rate, low interest rates, skyrocketing house prices and land speculation, among others, encourage massive lending for the acquisition of property; in 2005 alone, more than *** million home mortgages were granted in Spain. When the bubble burst and the financial crisis hit the country, residential real estate transactions plummeted and households’ non-performing loans jumped to nearly ** billion euros as countless families were not able to cope with their debts. Over a decade after the onset of the crisis, and despite falling mortgage rates, the volume of mortgage loans keeps decreasing every year. A homeowner country Traditionally, Spain has been a country of homeowners; in 2021, the homeownership rate was roughly ** percent. While nearly half of Spanish households own their property with no outstanding payment, the percentage of households that have loan or mortgage pending has been decreasing in recent years. Despite ownership remaining as the preferred tenure option, cultural changes, job insecurity and mounting house prices are prompting Spaniards to opt more and more to become tenants instead of owners, as shown in the changing dynamics of the Spanish residential rental market.

In the United States, interest rates for all mortgage types started to increase in 2021. This was due to the Federal Reserve introducing a series of hikes in the federal funds rate to contain the rising inflation. In the second quarter of 2025, the 30-year fixed rate dropped slightly, to **** percent. The rate remained below the peak of **** percent in the fourth quarter of 2023. Why have U.S. home sales decreased? Cheaper mortgages normally encourage consumers to buy homes, while higher borrowing costs have the opposite effect. As interest rates increased in 2022, the number of existing homes sold plummeted. Soaring house prices over the past 10 years have further affected housing affordability. Between 2014 and 2024, the median price of an existing single-family home risen by about ** percent. On the other hand, the median weekly earnings have risen much slower. Comparing mortgage terms and rates Between 2008 and 2024, the average rate on a 15-year fixed-rate mortgage in the United States stood between **** and **** percent. Over the same period, a 30-year mortgage term averaged a fixed-rate of between **** and **** percent. Rates on 15-year loan terms are lower to encourage a quicker repayment, which helps to improve a homeowner’s equity.

The Architecture industry has faced a challenging landscape over the last five years, grappling with shifts in work models and financial fluctuations. The pandemic ushered in remote and hybrid work environments, waning the need for traditional office spaces, as climbing office vacancies hit a record 20.7% nationwide in 2025. Architects are redefining their strategies, with vacancy rates above 26.0% in cities like San Francisco and Austin at the end of 2024. The industry’s revenue in 2025 is expected to expand by 1.7% reaching $65.7 billion, after growing at a CAGR of 3.7% over the past five years. The $1.2 trillion Infrastructure Investment and Jobs Act offers a significant financial boost against potential downturns, representing a considerable portion of industry revenue and opening new opportunities for public sector projects. Economic challenges in recent years, including fluctuating interest rates and inflation, have hindered architects’ profit. The Federal Reserve’s interest rate hikes between 2022 and 2023 dampened residential construction. These elevated financing costs caused clients to delay or cancel projects, dragging industry revenue. Residential construction values dipped, reducing housing starts by 8.4% and 3.5% in 2023 and 2024, respectively. In response, architects have had to shift operations by diversifying portfolios and embracing sustainable design practices, stabilizing profit at around 13.0%. Technological integration has helped architects streamline efficiencies and minimize costs, especially when employing BIM and 3D printing. Looking ahead, the recovering housing market and increased focus on sustainability drive a promising outlook for architecture firms. Interest rate cuts present new possibilities in residential construction, expected to climb but 1.5% in 2026, accelerating purchases of architectural design services. As urbanization accelerates and populations swell in metropolitan hubs, architects will play a key role in transforming cities through mixed-use and vertical living designs. Sustainability will become a central element, with advanced technologies like solar panels and green building innovations leading the charge. Developers increasingly recognize and leverage the fiscal advantages of eco-conscious projects. The expansion of AI, VR and AR promises to strengthen accuracy, enhance client engagement and streamline project deliverables. Architects who strategically position themselves in high-growth regions like the Southeast and integrate sustainable practices will thrive, capitalizing on emerging trends and expanding their market presence. Revenue will expand at a modest CAGR of 2.2% over the next five years, reaching $73.4 billion in 2030.

30 Year Mortgage Rate in the United States decreased to 6.23 percent in November 26 from 6.26 percent in the previous week. This dataset includes a chart with historical data for the United States 30 Year Mortgage Rate.

Revenue for apartment lessors has expanded through the end of 2025. Apartment lessors collect rental income from rental properties, where market forces largely determine their rates. The supply of apartment rentals has grown more slowly than demand, which has elevated rental rates for lessors' benefit. As the Federal Reserve hiked interest rates 11 times between March 2022 and January 2024, homeownership was pushed beyond the reach of many, resulting in a tighter supply and increased demand for rental properties. Despite three interest rate cuts in 2024, mortgage rates have remained stubbornly high in 2025, encouraging consumers to rent. Revenue has climbed at a CAGR of 2.6% over the past five years and is expected to reach $295.3 billion by the end of 2025. This includes an anticipated 1.4% gain in 2025 alone. The increasing unaffordability of housing is caused by the steady climb of mortgage rates and high prices maintained by a low supply. Supply has been held down as buyers who locked in low rates stay put, and investment groups hold a strategic number of their properties empty as investments. Industry profit has remained elevated because of solid demand for apartment rentals. Through the end of 2030, the apartment rental industry's future performance will be shaped by varying factors. The apartment supply in the US, which hit a record in 2024, is expected to taper off, which will push rental prices and occupancy rates up to the lessors' benefit. Other factors, such as interest rate cuts, decreasing financial barriers to homeownership and a high rate of urbanization, will also significantly impact the industry. With an estimated 80.7% of the US population living in urban areas, demand for apartment rentals will strengthen, although rising rental prices could force potential renters to cheaper suburbs. Demand will continue to outpace supply growth, prompting a climb in revenue. Revenue is expected to swell at a CAGR of 1.7% over the next five years, reaching an estimated $321.9 billion in 2030.

Wood framing contractors have navigated a challenging landscape marked by fluctuating housing starts and rising costs. In recent years, their fortunes have been mainly tied to the ebb and flow of residential construction, which has seen significant volatility. The low interest rates of 2020 and 2021 spurred substantial growth in housing starts, boosting single-family and multifamily projects. However, interest rate hikes in 2022 slowed single-family construction, although multifamily units showed resilience. Yet, as interest rates remained high, the multifamily sector also took a hit by 2023, reflecting broader trends in housing starts. Single-family housing starts rebounded in 2024 amid low housing stock, but multifamily housing starts bottomed out. Still, contractors found stability in single-family attached projects. Industry revenue has been increasing at a CAGR of 1.8% over the past five years to total an estimated $31.5 billion in 2025, including an estimated gain of 1.9% in 2025. Over the past five years, lumber prices soared, driven by supply chain disruptions and environmental factors like wildfires and pest infestations. This has made profitability a challenge for contractors. Labor shortages exacerbated the issue, forcing wage hikes to attract workers as retirements outpaced the entry of new labor. Despite these pressures, slow growth among new entrants has mitigated some price competition. Meanwhile, home improvement projects offered some relief, though DIY trends and high interest rates tempered this growth. On the nonresidential front, contractors missed opportunities in surging warehouse and data center construction, where demand for steel and concrete sidelined wood. Wood framing contractors face a complex future shaped by persistent high rates and evolving construction demands. The potential for rate cuts could revive single-family projects, yet lumber tariffs and labor shortages loom large. Anticipated housing shortages might offer a silver lining in residential construction, but stricter fire-resistant codes in wildfire-prone areas challenge traditional wood framing. Contractors will need to adapt to labor shortages by embracing prefabrication and modular techniques. The growing demand for hotel and retail construction provides a promising avenue, while office-to-multifamily conversions could further boost opportunities. Industry revenue is forecast to climb at a CAGR of 2.1% to total an estimated $35.0 billion through the end of 2030.

The Commercial Real Estate (CRE) industry is exhibiting significant variations across markets, with persistently high office vacancy rates juxtaposed against thriving prime office spaces. Hard hit by the widespread adoption of remote and hybrid work models, the overall office vacancy rate rose to 20.7% in Q2 2025, up from the pre-pandemic rate of 16.8%. However, leasing volumes for prime office spaces are climbing, providing opportunities for seasoned investors. On the other hand, the multifamily sector is gaining from a prominent move towards renting, primarily driven by housing affordability concerns and changing lifestyle preferences. This has strengthened demand for multifamily properties and opportunities to convert underutilized properties, such as offices, into residential rentals. The industrial real estate segment is also moderating, with the boom in e-commerce and industrial construction activity in 2021 and 2022 moderating more recently. Industry revenue has gained at a CAGR of 1.7% to reach $1.5 trillion through the end of 2025, including a 1.0% climb in 2025 alone. The industry is grappling with multiple challenges, including wide buyer-seller expectation gaps and significant disparities in demand across different geographies and asset types. Despite interest rate cuts in 2024 and 2025, economic uncertainty and labor market weakness have resulted in tighter credit and lending conditions. Because of remote working trends, office delinquency rates swelled to above 14.0% in 2025, leading to a job market increasingly concentrated in certain urban centers. Through the end of 2030, the CRE industry is expected to stabilize as the construction pipeline shrinks, reducing new supply and, in turn, rebalancing supply and demand dynamics. With this adjustment, occupancy rates will likely improve, and rents may gradually climb. The data center segment will witness accelerating demand propelled by the rapid expansion of artificial intelligence, cloud computing and the Internet of Things. Likewise, mixed-use properties are poised to gain popularity, driven by the growing appeal of flexible spaces that accommodate diverse businesses and residents. This new demand, coupled with the retiring baby boomer generation's preference for leisure-centric locales, is expected to push the transformation of traditional shopping plazas towards destination centers, offering continued opportunities for savvy CRE investors. Industry revenue will expand at a CAGR of 1.9% to reach $1.7 trillion in 2030.

The development of credit banks in Germany over the last five years has been strongly influenced by several factors, including the transition from a prolonged period of low interest rates to significantly higher interest rates, the COVID-19 pandemic, the war in Ukraine and the recession of recent years. Industry turnover, which is made up of the interest and commission income of credit banks, has risen by an average of 19.6% per year since 2020. The strong increase in the last five years can be attributed to the following reason: For a long time, banks did not generate significantly higher income as the European Central Bank's (ECB) key interest rate remained at 0% for a long period of time. Only the significant increase in the key interest rate to combat inflation revitalised the traditional interest margin business. This then led to significantly rising growth rates in earnings. However, IBISWorld expects the positive sales trend to weaken in 2025, even if the higher base rate level, which improves interest income, is still clearly noticeable. Industry turnover is expected to increase by 3% year-on-year to 202.4 billion euros.Banks offered loans on favourable terms due to the low interest rates that prevailed for a long time. This increased the demand for loans and the lending volume in the sector rose. In addition, digitalisation has prompted banks to rethink their business concepts, which has led to numerous branch closures over the last five years. This has led to job cuts and savings. IBISWorld expects this trend to continue in the coming years and more banks to rely on the use of modern technologies for business processing.For the period from 2025 to 2030, IBISWorld forecasts average annual sales growth of 1.8% to 221.3 billion euros. The high level of key interest rates is expected to be mitigated by slight interest rate cuts to stimulate the economy, which will have a positive impact on the earnings situation of credit banks. The hoped-for economic recovery is not yet in sight. The International Monetary Fund anticipates further weak growth in the global economy this year, which is likely to hit Germany hard in a global comparison. As a result, there is also a risk that corporate customers, who are important for the sector, will demand fewer loans.

Real estate investment trusts (REITs) are attractive investment vehicles, as they are exempt from corporate tax. A reduction in REIT requirements and restrictions has encouraged new entrants, although many were hit hard by the retail crash during the COVID-19 outbreak. Revenue is expected to grow at a compound annual rate of 0.4% over the five years through 2024-25 to £8.5 billion including estimated growth of 11.8% in 2024-25, while the average profit is expected to be 19.3%. As many REITs own some form of retail and office property, lockdowns and social distancing measures during the pandemic meant the REIT industry lost revenue. Many REITs were forced to sell assets to stay afloat, threatening a spiral in retail property value, with shopping centre giant Intu Properties collapsing into administration. While many REITs with exposure to warehouses performed well in the aftermath of the COVID-19 outbreak amid the e-commerce boom, the industry contended with significant headwinds like rising interest rates and rock-bottom confidence in 2022-23, hurting asset valuations and stifling investment activity. Macroeconomic conditions improved somewhat in 2023-24, with both business and consumer confidence picking up thanks to more optimistic growth prospects and stabilising interest, supporting rental income. However, the higher base rate environment has posed financing challenges, resulting in REITs finding alternative sources of finances like share placements to capitalise on low property values. In 2024-25, REITs have welcomed interest rate cuts, easing financing pressures and lifting asset values. This will support balance sheets, driving investment activity and revenue growth. REIT revenue is forecast to grow at a compound annual rate of 5.6% over the five years through 2029-30 to £11.2 billion. The hike in corporation tax in April 2023 has resulted in investors looking towards REITs due to their tax advantages, positioning REITs for significant investment in the coming years and driving revenue growth. REITs will welcome solid government support in the form of regulatory changes aiming at making the industry more competitive. Technological innovation will also shape the industry. Most notably, proptech solutions are being introduced, which improve property management and operating efficiency, supporting profit.

The UK inflation rate was 3.8 percent in September 2025, unchanged from the previous two months, and the fastest rate of inflation since January 2024. Between September 2022 and March 2023, the UK experienced seven months of double-digit inflation, which peaked at 11.1 percent in October 2022. Due to this long period of high inflation, UK consumer prices have increased by over 20 percent in the last three years. As of the most recent month, prices were rising fastest in the education sector, at 7.5 percent, with prices increasing at the slowest rate in the clothing and footwear sector. The Cost of Living Crisis High inflation is one of the main factors behind the ongoing Cost of Living Crisis in the UK, which, despite subsiding somewhat in 2024, is still impacting households going into 2025. In December 2024, for example, 56 percent of UK households reported their cost of living was increasing compared with the previous month, up from 45 percent in July, but far lower than at the height of the crisis in 2022. After global energy prices spiraled that year, the UK's energy price cap increased substantially. The cap, which limits what suppliers can charge consumers, reached 3,549 British pounds per year in October 2022, compared with 1,277 pounds a year earlier. Along with soaring food costs, high-energy bills have hit UK households hard, especially lower income ones that spend more of their earnings on housing costs. As a result of these factors, UK households experienced their biggest fall in living standards in decades in 2022/23. Global inflation crisis causes rapid surge in prices The UK's high inflation, and cost of living crisis in 2022 had its origins in the COVID-19 pandemic. Following the initial waves of the virus, global supply chains struggled to meet the renewed demand for goods and services. Food and energy prices, which were already high, increased further in 2022. Russia's invasion of Ukraine in February 2022 brought an end to the era of cheap gas flowing to European markets from Russia. The war also disrupted global food markets, as both Russia and Ukraine are major exporters of cereal crops. As a result of these factors, inflation surged across Europe and in other parts of the world, but typically declined in 2023, and approached more usual levels by 2024.

The average price per square foot of floor space in new single-family housing in the United States decreased after the great financial crisis, followed by several years of stagnation. Since 2012, the price has continuously risen, hitting ****** U.S. dollars per square foot in 2024. In 2024, the average sales price of a new home exceeded ******* U.S. dollars. Development of house sales in the U.S. One of the reasons for rising property prices is the gradual growth of house sales between 2011 and 2020. This period was marked by the gradual recovery following the subprime mortgage crisis and a growing housing sentiment. Another significant factor for the housing demand was the growing number of new household formations each year. Despite this trend, housing transactions plummeted in 2021, amid soaring prices and borrowing costs. In 2021, the average construction cost for single-family housing rose by nearly ** percent year-on-year, and in 2022, the increase was even higher, at close to ** percent. Financing a house purchase Mortgage interest rates in the U.S. rose dramatically in 2022 and remained elevated until 2024. In 2020, a homebuyer could lock in a 30-year fixed interest rate of under ***** percent, whereas in 2024, the average rate for the same mortgage type was more than twice higher. That has led to a decline in homebuyer sentiment, and an increasing share of the population pessimistic about buying a home in the current market.

Divergent trends in the building and infrastructure sectors have constrained the Construction division’s performance through the end of 2024-25, with revenue expected to drop by an annualised 1.2% to $521.2 billion. Rollercoaster-like trends in the residential building market and pandemic-related supply chain disruptions have constrained the performance of homebuilders and many special construction service industries. Still, favourable trends in non-residential building construction and non-building infrastructure construction generate buoyant conditions for some Construction division segments. New house construction surged to a record peak in 2021-22, supported by the Federal Government’s HomeBuilder stimulus and record-low interest rates. Still, new house construction has plunged in recent years following the hike in mortgage interest rates as the RBA seeks to quell inflation. Many small homebuilders have hit the wall in response to intense competition, escalating input costs and plunging profit margins. Conversely, the construction of multi-unit apartments and townhouses has gradually recovered from the deep trough in 2021-22 as investors return to address the severe rental shortages in the face of mounting population pressures. Divisional revenue contracted with the 2023-24 housing slump and is expected to sink 3.2% in 2024-25. Some large prime and specialist trade contractors have derived substantial stimulus from constructing landmark road and rail developments, including the WestConnex motorway in Sydney and the Cross River Rail in Brisbane. Similarly, conditions have been strong for contractors working on non-residential building projects, particularly accelerated growth in the construction of industrial warehouses and distribution facilities. Favourable trends in the residential building market are forecast to underpin modest growth in Construction division revenue at an annualised 1.2% over the five years through 2029-30 to $554.0 billion. Many prime building and special construction contractors will benefit from an upswing in demand for constructing multi-unit dwellings and, to a lesser extent, single-unit housing and home renovations. The housing market will benefit from the initiatives under the National Housing Accord. Construction activity will remain stable in the non-residential market. At the same time, the principal constraint on the Construction division will come from the staged completion of several landmark road and rail projects.

During the COVID-19 pandemic, the number of house sales in the UK spiked, followed by a period of decline. In 2023 and 2024, the housing market slowed notably, and in January 2025, transaction volumes fell to 46,774. House sales volumes are impacted by a number of factors, including mortgage rates, house prices, supply, demand, as well as the overall health of the market. The economic uncertainty and rising unemployment rates has also affected the homebuyer sentiment of Brits. How have UK house prices developed over the past 10 years? House prices in the UK have increased year-on-year since 2015, except for a brief period of decline in the second half of 2023 and the beginning of 2024. That is based on the 12-month percentage change of the UK house price index. At the peak of the housing boom in 2022, prices soared by nearly 14 percent. The decline that followed was mild, at under three percent. The cooling in the market was more pronounced in England and Wales, where the average house price declined in 2023. Conversely, growth in Scotland and Northern Ireland continued. What is the impact of mortgage rates on house sales? For a long period, mortgage rates were at record-low, allowing prospective homebuyers to take out a 10-year loan at a mortgage rate of less than three percent. In the last quarter of 2021, this period came to an end as the Bank of England rose the bank lending rate to contain the spike in inflation. Naturally, the higher borrowing costs affected consumer sentiment, urging many homebuyers to place their plans on hold and leading to a decline in sales.

The Global Financial Crisis of 2008-09 was a period of severe macroeconomic instability for the United States and the global economy more generally. The crisis was precipitated by the collapse of a number of financial institutions who were deeply involved in the U.S. mortgage market and associated credit markets. Beginning in the Summer of 2007, a number of banks began to report issues with increasing mortgage delinquencies and the problem of not being able to accurately price derivatives contracts which were based on bundles of these U.S. residential mortgages. By the end of 2008, U.S. financial institutions had begun to fail due to their exposure to the housing market, leading to one of the deepest recessions in the history of the United States and to extensive government bailouts of the financial sector.

Subprime and the collapse of the U.S. mortgage market

The early 2000s had seen explosive growth in the U.S. mortgage market, as credit became cheaper due to the Federal Reserve's decision to lower interest rates in the aftermath of the 2001 'Dot Com' Crash, as well as because of the increasing globalization of financial flows which directed funds into U.S. financial markets. Lower mortgage rates gave incentive to financial institutions to begin lending to riskier borrowers, using so-called 'subprime' loans. These were loans to borrowers with poor credit scores, who would not have met the requirements for a conventional mortgage loan. In order to hedge against the risk of these riskier loans, financial institutions began to use complex financial instruments known as derivatives, which bundled mortgage loans together and allowed the risk of default to be sold on to willing investors. This practice was supposed to remove the risk from these loans, by effectively allowing credit institutions to buy insurance against delinquencies. Due to the fraudulent practices of credit ratings agencies, however, the price of these contacts did not reflect the real risk of the loans involved. As the reality of the inability of the borrowers to repay began to kick in during 2007, the financial markets which traded these derivatives came under increasing stress and eventually led to a 'sudden stop' in trading and credit intermediation during 2008.

Market Panic and The Great Recession

As borrowers failed to make repayments, this had a knock-on effect among financial institutions who were highly leveraged with financial instruments based on the mortgage market. Lehman Brothers, one of the world's largest investment banks, failed on September 15th 2008, causing widespread panic in financial markets. Due to the fear of an unprecedented collapse in the financial sector which would have untold consequences for the wider economy, the U.S. government and central bank, The Fed, intervened the following day to bailout the United States' largest insurance company, AIG, and to backstop financial markets. The crisis prompted a deep recession, known colloquially as The Great Recession, drawing parallels between this period and The Great Depression. The collapse of credit intermediation in the economy lead to further issues in the real economy, as business were increasingly unable to pay back loans and were forced to lay off staff, driving unemployment to a high of almost 10 percent in 2010. While there has been criticism of the U.S. government's actions to bailout the financial institutions involved, the actions of the government and the Fed are seen by many as having prevented the crisis from spiraling into a depression of the magnitude of The Great Depression.