U.S. homebuyers are very sensitive to mortgage interest rates, and climbing mortgage rates have hurt affordability for many in the market to buy a home. With each uptick in mortgage rates, there's a corresponding reduction in the number of homebuyers in the market. Mortgage rates have now reached their highest level in 20 years, and as elevated borrowing costs leave behind fewer buyers in the for-sale market, housing inventory is climbing. There are currently 495,000 single-family homes active on the market, the most inventory available since the start of the year, HousingWire reports.
Housing supply typically peaks at the close of August and levels off into the fall, but housing experts say inventory will likely continue to rise throughout September if interest rates maintain their upward trajectory.
There are 10% fewer homes on the market now than last year at this time. Last year inventory spiked from March through July with spiking mortgage rates. Then it leveled off a bit. So this week inventory lost ground on last year. The inventory gain week to week was more than it was last year at this time. That’s the first time this happened in many months. Last week there were 10.5% fewer homes on the market, this week that’s only 10% fewer. This is one of the subtle signals that higher mortgage rates have slowed this year’s home buyers again.
To understand the future of housing inventory in this country remember the Altos Rule. The Altos rule says that the more available inventory of homes to buy is the result of higher mortgage rates. If rates climb, so does inventory. If rates fall, inventory will fall.