Over the past two years, the housing market has slowed from a red-hot homebuying boom to a period of near-stagnant sales, thanks to surging mortgage rates coupled with high home prices. Interest rates hovering in the mid-6% range are eroding buyer demand and leading to a major slowdown in home price gains. While most housing experts say homebuying will eventually pick back up, long-term outlooks are more uncertain.
The general consensus among the industry’s leading economists is that the housing market is in for a challenging year ahead, but low supply could prevent elevated prices from slipping even into 2024 and beyond, Forbes reports.
The country has an acute housing supply problem due to a combination of factors.
For one, declines in pending sales and fewer homes on the market are making housing inventory even tighter. These trends may continue, as homeowners who purchased at a low mortgage rate in recent years are likely staying put for the foreseeable future. NAR reports that buyers expect to remain in their homes for a median of 15 years.
[Len] Kiefer shares this view, seeing the housing supply issue as a long-term problem. “The housing shortfall has put pressure on housing markets and will likely be with us for years to come.”