- ORIGINAL NEWS
Home price growth is back at pre-pandemic levels. Here’s what that means for buyers and sellers
- SUMMARY
The U.S. housing market is going through a moderate adjustment.
Home prices continue to increase, but not as rapidly as during the pandemic surge.
This is similar to the steady, gradual pace seen before the pandemic.
However, the market situation is different now.
Affordability remains a challenge for most buyers as home prices remain high.
Inventory is improving gradually, yet still insufficient to meet demand.
This has resulted in a stalemate between buyers and sellers.
Mortgage rates drive a significant portion of the issue.
While they have come down from the peak, they are still far above the lows of the pandemic.
Buyers face increased financial hurdles in securing a mortgage, causing a significant drop in housing transactions.
Supply is another critical issue.
Although new listings are increasing, they are still below pre-pandemic levels.
This limited supply stems from a combination of seasonal factors, life events, and the so-called “golden handcuff effect.”
Homeowners may have low mortgage rates from the pandemic, making them hesitant to sell and incur higher rates for a new home.
While the golden handcuff effect is gradually waning, the Federal Reserve’s future interest rate cuts could further boost inventory availability.
New-home sales are providing some relief to buyers facing the tight supply of existing homes.
However, it may take some time to make up for the overall lack of inventory.
Experts predict that mortgage rates will decline modestly this year, and home prices nationally will remain steady or unchanged.
New-home sales are expected to remain strong, giving builders a competitive advantage.
However, the market remains challenging for buyers and sellers alike, with high costs and limited options affecting the overall dynamics.
- NEWS SENTIMENT CHECK
- Overall sentiment:
neutral
Positive
“”The rate at which home prices grow is slowing down.” “
“”New listings climbed 5% during the last four weeks ended March 17, the biggest year-over-year jump since May 2023, Redfin found.””
Negative
“”However, the market today is vastly different from the market two to eight years ago, experts say. The average home is still unaffordable for most potential buyers while inventory has slightly improved but not enough to meet demand.””
“”And while the rate lock-in effect is still playing a role in today’s low inventory, it will fade further over time, especially as the Federal Reserve decides to cut rates later this year, Fairweather said.””