Now that mortgage rates are rising so quickly (and they’ve gone up even more sharply since February, crossing into 5% territory, according to lender data provided to The Balance) the question on everyone’s mind is whether price increases may begin to moderate. Prices soared as buyers competed for record-low numbers of listings during much of the pandemic, and while there are early signs that the rising rates may be shifting the supply and demand balance, it could take years for the for-sale listings to get back to normal levels, according to housing experts polled by real estate firm Zillow Feb. 16-March 2. When Zillow asked them when the inventory of unsold homes would return to at least a monthly average of 1.5 million—in February it was less than half of that, according to Zillow data—the most popular answer was 2024, shared by about 38% of experts, with 2023 a close second at about 37%. Only 4.2% thought inventory would be back to normal by the end of 2022, and over 20% said 2025 or later. The double-whammy of soaring home prices and rising mortgage rates has pushed monthly payments skyward much faster than homebuyers’ incomes have increased, according to MBA, which started to track the median monthly payments for a new index it created to measure home affordability. The index, which goes higher as a greater share of income is used for the mortgage payment, jumped 19% in the first two months of the year. Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.
