High-End Homebuying Slows as Affordability Concerns Mount

Throughout the pandemic, buyers shopping for homes in the middle and top price tiers encountered low supply and strong competition, but two years later, inventory for the least expensive homes is tightest, and the sales gap has closed, Forbes reports. Higher mortgage rates are exacerbating an existing affordability crisis in the housing market, and in order to get a foot in the door, buyers are seeking out the lowest-priced homes on the market.

Those who can afford homes at the top end of the market are seeing more for-sale inventory and less demand from competing buyers, but inventory is falling at the bottom of the market as sellers become more reluctant to list their homes and enter into a volatile market as buyers.

At the end of July, inventory in the most expensive third of the housing market was up 11% month over month, and 19.3% higher than a year earlier. Similarly, inventory in the middle third was up 12.7% month over month and 17.3% annually. Inventory is growing in the lowest-priced third as well, but only 11.2% month over month and 10.4% year over year. During the same period in 2021, inventory in the least expensive tier was growing on a monthly basis at nearly twice the rate of the most expensive homes.

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