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There are few houses left to buy

Monday, February 7, 2022   /   by Ken Couture

There are few houses left to buy

There are few houses left to buy.png
There are hardly any houses left. Housing is likely to continue to get more expensive, despite the Fed's efforts to cool the market. 
 
Overview: The supply of homes for sale has fallen to a record low in recent months – and while you may win the bidding war to buy one, mortgage costs are on the rise. 
 
Why it matters: Home prices have risen over the past two years as  Americans moving have taken advantage of historically low mortgage rates. 
 
This boom has made housing less affordable for buyers and renters alike, with housing becoming a major source of inflationary pressures plaguing Americans.  The price of an existing home has increased from about $275,000 at the end of 2019 to $358,000 in December 2021, according to the National Association of Realtors. News lead: The Fed recently signaled that it will raise interest rates in an effort to curb inflation. As a result, mortgage rates rose sharply. 
 
The average 30-year fixed mortgage rate rose from 2.98% in November to 3.55% at the end of last month, according to Freddie Mac. Such an increase would add about $200 to the monthly mortgage payment for the median-priced home in the United States, according to S&P estimates.  In theory, higher mortgage rates should help calm the housing market by making homes a little more expensive and effectively narrowing the universe of potential buyers. 
 
Yes, but: In practice, home prices — like all market prices — are a tango between supply and demand. And right now, there`s hardly any supply of houses for sale. 
 
There were just 790,000 existing single-family homes available for sale in December, the lowest level on record.  What they`re saying: “We really do see, just, astonishingly low inventory this winter,” said Jeff Tucker, a senior economist at Zillow, told Axios. “The shelves look pretty empty from the perspective of home shoppers.” 
 
The bottom line: For the moment, analysts seem to think the mismatch between throngs of would-be buyers and a piddling number of houses for sale favors higher prices to come. 

“We still think demand will eclipse housing supply,” wrote Goldman Sachs analysts in a recent note. “And we continue to expect year-over-year [home price appreciation] of 10.1% for full-year 2022.” 
 o buy


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