As we enter the spring season—typically viewed as the busy time for the housing market—US home sales remain in a deep freeze.
Home sales are lower than the worst seen during the Global Financial Crisis, especially after adjusted for population growth.
The primary issue is affordability, driven by (relatively) high mortgage rates and a lack of supply. The supply story is two-fold. For existing home sales, the significant gap between the average 30-year fixed mortgage rate (currently above 6%), and the incredibly low post-pandemic rates that many homeowners locked in has kept inventory suppressed. After all, how many homeowners would want to leave a sub-3% mortgage?
At the same time, higher rates and inflation have weighed on homebuilders, limiting the supply of new homes on the market. Lack of supply has contributed to home prices rising over the past several…
