Is This Really ‘the Worst Time to Buy a Home’?

For four years now, the housing market has defied all logic.

A global pandemic didn’t collapse prices, but sent them soaring to new heights. Last year, mortgage rates hit a 23-year high and sales plummeted. Even so, home prices stubbornly kept rising, creating the most unaffordable housing market in generations.

This year offers a new plot twist: More apartments are under construction than at any time in half a century, delivering renters more new apartments than they’ve seen in decades.

So while buying a home continues to be an infuriating experience, marked by high prices, high interest rates and low inventory, renting an apartment is getting easier. That means that unless you plan to live in a house for the next decade or so, now may not be the best time to buy it.

“This is about the worst time to buy a home,” said Christopher Mayer, a real estate professor at Columbia Business School.

Yes, mortgage rates have edged down from their October peak of almost 8 percent, and inventory has ticked up as sellers creep back into the market. But the overall picture hasn’t changed in any meaningful way — and likely won’t anytime soon.

Most economists don’t expect mortgage rates to fall much more this year. The average 30-year fixed-rate mortgage was 6.6 percent in the third week of January, according to Freddie Mac. And while optimists like Selma Hepp, the chief economist for CoreLogic, think that rates may dip below 6 percent by the end of the year, pessimists like Skylar Olsen, the chief economist at Zillow, think they could inch closer to 7 percent again.

The headwinds are not pleasant. In December, the number of new listings was up 2 percent from a year earlier, but still down almost 15 percent from prepandemic levels, according to Zillow. As for prices, economists expect them to more or less flatten this year. Redfin is predicting that they’ll fall by 1 percent; Freddie Mac, that they’ll increase by just 2.5 percent, half the rate of 2023.

All of this means that anyone buying a home today will likely pay top dollar, at a high borrowing cost, for an asset that may have already peaked.

As Mr. Mayer put it, you’re “effectively buying a luxury good, and it’s not going to pay the same rate of return” as other investments.

The Year of the Renter?

The rental market, however, looks a little different, at least for this year.

Not since 1973 has the United States seen so many apartments — about 1 million nationwide — under construction at once. More than half will be available this year, and almost all are rentals.

Many of these developments broke ground during the pandemic, when developers bet on a market with soaring rents, as people uprooted their lives and moved. But a multifamily building takes time to construct, and these buildings are entering a changed landscape. Renters, squeezed to their financial limits, are no longer signing as many leases, which is driving up vacancies.

Asking rents were basically flat last year across the…