The US Housing Market Faces a Threefold Challenge in 2023—Here’s What’s at Stake

Home prices fell 0.24% from December to January, while the annual home price growth rate fell to 3.43% at the start of the year, but according to HousingWire, more upward pressure on 30-year rates could slow the annual home price growth rate to below 0% by March or April. Elevated mortgage rates are dampening buyer demand nationwide, but rather than listing their homes and refinancing, sellers are also pulling back from the for-sale market.

As a result, supply is dwindling, and that inventory shortage is sustaining high home prices even during a market correction.

“Today, we see buyer demand dampened under pressure from rising rates and their impact on affordability, with purchase rate-lock volumes cooling in late February,” Andy Walden, vice president of enterprise research strategy at Black Knight, said in a statement.

“We’ve seen a consistent theme of potential sellers – many with first-lien rates a full 3 percentage points below today’s offerings – pulling back from putting their homes on the market,” Walden said.

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