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Housing supply is on the uptick post-pandemic thanks to unwavering demand in a booming housing market, but according to Lawrence Yun, chief economist for the National Association of Realtors, external factors could chip away at that steady progress. Low housing inventory and steadily rising inflation are creating a roadblock for prospective buyers, one that could be big enough to slow the market after years of speedy and competitive home sales.
Not only are monthly payments becoming more expensive, but as the rate of inflation outpaces wage growth across the U.S., buyers are being forced to delay their home purchases. Rates will likely continue to increase into 2023, creating an uphill battle for would-be homebuyers that will extend long after peak buying season, Forbes reports.
NAR calculates purchasing a home is now 55% more expensive than a year ago. Rising mortgage rates and prices hurt affordability, and although wages are improving, Yun says they are “wiped away” due to inflation.
“Wages have risen by 6% from one year ago, and that’s good news,” said Yun. “But inflation is at 8.5%.” He estimates inflation will remain elevated for the next several months and that the market will see further monetary policy tightening through a series of rate hikes.
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