Experts are convinced that the U.S. housing market will continue to get more expensive, despite efforts by the Federal Reserve to rein in inflation, Axios reported on Sunday.
"We still think demand will eclipse housing supply," wrote Goldman Sachs analysts recently. "And we continue to expect year-over-year [home price appreciation] of 10.1% for full-year 2022."
The major reason for this is that there were only 790,000 existing single-family homes available for sale nationwide in December, which set a record for the lowest level ever.
That makes homes that are available more expensive, since buyers are competing for relatively few units.
In an attempt to bring inflation down, the Federal Reserve has indicated that it will boost interest rates, which has resulted in a jump in mortgage rates, according to Axios.
The average 30-year fixed mortgage rates, in fact, jumped from 2.98% in November to 3.55% late last month, according to FreddieMac, resulting in an approximate $200 increase to the monthly mortgage payment on the median priced home.
That theoretically should reduce the number of potential buyers, because higher mortgage rates make purchasing a house more expensive.
By this reasoning, with less buyers, housing prices should come down.
But Jeff Tucker, a senior economist at Zillow, stressed to Axios that "we really do see, just, astonishingly low inventory [of housing] this winter. The shelves look pretty empty from the perspective of home shoppers," meaning that any reduction in buyers would not, most likely be enough to reduce prices.
The sharp increase in housing prices over the past two years was largely fueled by record low mortgage rates.
In fact, the National Association of Realtors said that the price of an existing home went up from some $275,000 at the end of 2019 to $358,000 this past December.
Brian Freeman, a Newsmax writer based in Israel, has more than three decades writing and editing about culture and politics for newspapers, online and television.
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