Elevated Mortgage Rates, Home Prices Could Signal a Slowdown, Experts Say

Homebuyers delayed by record-high prices and a supply deficit during the pandemic are finally deciding to jump into action post-pandemic, but many are finding unchanged market conditions, and in some cases, even more volatility than before. Nonetheless, economists are optimistic that long-awaited relief is on the horizon once rising interest rates and inflation create a slowdown in housing demand.

As more buyers are priced out of the market, demand will drop, and so too will housing prices, giving buyers a fresh start with increased affordability and also granting builders a window of opportunity to create additional housing supply, Forbes reports.

“The past week’s data spotlights a market still struggling with a shortage of inventory and rising prices,” said Realtor.com senior economist George Ratiu. “However, there are clear green shoots, and the moderation in the upward price trajectory is an indication we are moving toward more balance.”

He explained, “With home buyers squeezed from multiple directions by higher home prices, interest rates and inflation, market demand is expected to moderate and lead to slowing momentum for property appreciation.”

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