In a recent interview with MarketWatch, Priscilla Almodovar, the President of Fannie Mae, highlighted the unprecedented state of the current real estate market. “At this moment, the housing market is exceedingly challenging for consumers,” she stated. “We’re closely monitoring all trends since this is something we’ve never seen before.”

At 57, Almodovar brings over 20 years of experience in real estate policy and has been recognized as one of the 50 most influential people in the market. A native of Brooklyn, she previously managed the New York State Housing Finance Agency during the mortgage crisis of 2007, which triggered the financial downturn. The current situation for homebuyers stands in stark contrast to that crisis; demand is soaring while supply remains unfulfilled. Despite high mortgage rates, increasing homeowners insurance, and rising home prices, there is still a strong urgency among buyers to purchase homes.

Almodovar pointed out, “Home prices are at their highest levels in 20 years.” She also expressed her view on mortgage rates, noting that they are unlikely to return to pre-pandemic levels anytime soon. During the pandemic, rates hovered around 3%, but she believes, “We may never see those rates again in our lifetime.”

Reports indicate that even when consumers are financially capable of buying homes, options in the market are scarce. Existing homeowners are hesitant to sell due to the prospect of facing higher interest costs, which creates a significant “lock-in effect” that greatly impacts the real estate market. According to a report from the Federal Housing Finance Agency released in March, home sales in Q4 2023 plummeted by 57% compared to the same period in 2022.

To reduce the cost of home buying, Almodovar emphasized the need for collaboration among federal, state, and local government officials. Experts agree that the solution to the housing market’s issues lies in addressing supply-side factors, such as building new homes while maintaining existing ones.

She noted that challenges to increasing housing supply largely fall under the jurisdiction of local governments. Issues like zoning regulations and the “Not-In-My-Backyard” (NIMBY) movement present significant hurdles that need to be resolved at the local level.

With high interest rates and soaring prices bringing the housing market to a standstill, Fannie Mae’s economists predict that only 4 million existing homes will be sold in the U.S. in 2024, the lowest number since 1995.