Home prices are expected to climb further this year, thanks to low inventories and high demand from millennial buyers
Those rising prices, coupled with soaring mortgage rates, are beginning to cool demand. Average home prices in America have increased by 15.9% in the past year, according to the US Census Bureau. Since the start of the pandemic, prices are up by nearly a third. After reaching record lows at the start of 2021, mortgage rates are now rising at their fastest pace in decades. The interest rate on a 30-year fixed-rate mortgage is now 5.
The drop in affordability has soured appetite. A recent survey by Gallup, a pollster, found that just 30% of Americans think it is a good time to buy a house, the lowest share since the firm began asking the question in 1978. Young people are especially downbeat. Among those aged 18 to 34, just 25% say it is a good time to buy.
. CoreLogic, a property-data firm, reckons that prices will rise by 5% over the next 12 months. Zillow, a property-listings website, has pencilled in an increase of 15%. Even if prices fall, most economists agree that a crash like the one that took place in 2007 is, thanks to healthier household balance sheets and stricter lending standards. Sellers may lament the cooling of the housing market.
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