HOME BUYERS FACE INCREASED PAIN AS MORTGAGE RATES RISE AND HOUSING STARTS FALL
The US housing market, which had shown signs of improvement in recent months, is starting to pose difficulties for homebuyers again. Recent data reveals that housing starts, which refers to the number of housing units being constructed, have fallen by 0.8% YoY, exacerbating the existing supply shortage in the market. At the same time, mortgage rates have risen, with the average rate reaching 6.43%. While this has resulted in a decline in demand, it has not led to a significant decrease in prices.
The current situation means that housing prices are likely to remain high, even with the rise in rates. This is concerning for investors who anticipate an impending recession, as a slowdown in the economy combined with increasing housing prices could be detrimental to the market.
The decline in housing starts is particularly worrying, as it could further intensify the supply-demand imbalance in the housing market. With fewer homes being constructed, homebuyers may find themselves competing for a limited supply, resulting in higher prices and increased difficulty in finding suitable properties.
Overall, the recent data points to a challenging environment for homebuyers, as mortgage rates rise and housing starts to decline. The supply-demand imbalance is likely to persist, keeping housing prices high, and investors are concerned about the potential consequences for the market if a recession does occur.