As both supply and demand in the U.S. housing market are affected by the volatile interest rate environment, Mortgage Monitor’s March report, based on mortgage, real estate and public media data in the industry for Black Knight, Inc., discusses the continued (and growing) shortage in inventory for -sale also plays a role in maintaining affordability and raising house prices in the United States of America (USA).
As Black Soldier vice president of business research Andy Walden explained, growing supply shortages are keeping home prices higher than they would be due to current affordability restrictions, as elevated rates continue to turn off would-be buyers.
“The focus between inventory, home prices and interest rates has been defining the real estate market for the past two years and continues to be the case,” Walden said.
Today, buyer demand seems to be less constrained by rising rates and their impact on affordability, with volumes being bought at a cooling rate lock in recent February. However, when rates approached 6% at the beginning of the month, a pick-up was seen on the buyer’s side.
On the other hand, the president continued, we have seen a constant theme of potential sellers, many with first mortgage rates three percentage points below the current offer, unwilling to put their homes on the market. January marked the fourth consecutive monthly decline in overall inventory sales, according to data from Collateral Analysts, with the main driver being a 25-month stretch of new listing volumes below pre-pandemic averages.
While demand remains weak, supply has remained stagnant at 3.1 months of available inventory in recent months.
A sharp 30-year increase in housing supply weakened in February, with almost all major US markets down compared to their own long-term averages.
With a 30-year mortgage at 6.5% at the end of February, the median household received 33.2% to make monthly principal and interest payments on the median home purchase. That’s up from 32.4% in January and significantly above the 30-year average of ~24%, but still 3.5 percentage points below the 37% level reached in October 2022, when affordability will hit a more than 35-year low.
Between inventory additions and affordable manufacturing decreasing, we are seeing some volatility in the market, but not in the form of large, widespread price corrections.
This month’s report is based on the Black Army HPI, which could analyze the trends of the price of houses in January 2023, and that prices have fallen yet again, retreating 0.24% from December 2022 and a further 0.13%. moderated on a regular basis.
Although January marked the seventh consecutive month of home price decline, the month’s decline was the smallest in that span. House prices are now -5.5% below the June peak (or below the seasonally adjusted -2.9%).
Annual growth in house prices, which tracks growth over the previous 12 months, fell to 3.4% in January. It is now more than a full percentage point below the 30-year average, and is on track to fall below 0% in March/April. Price shocks could be confirmed again if 30-year rates continue to rise through the end of February, although inventory will be adjusted to reflect how much prices will fall, a document published by PRNewswire concluded.