After 10 consecutive rate hikes, the Federal Reserve gave the U.S. housing market a brief reprieve last week, but according to Forbes, that doesn’t mean home prices are about to crash. The nationwide median home sale price is just shy of $389,000, down 1.7% from this time last year, and cities such as Austin, Texas, and Phoenix are seeing double-digit declines, but without an increase in housing inventory, experts say home prices will remain elevated throughout the remainder of 2023.
Not only is a lack of new construction sustaining a costly housing market, but the share of existing homes for sale is also decreasing as sellers get cold feet. There were just 392,000 homes listed for sale in April 2023, down from 498,000 in April 2022 and well below the 552,000 recorded in April 2019.
Buoyancy in the national average home prices is largely due to record-low inventory levels. The National Association of Realtors found at the start of 2022, the supply of homes for sale hit a record low of 1.6 months. It’s barely recovered since then.
As a result, Fed chair Jerome Powell said he was keeping an eye on the housing market. “Housing is very interest-sensitive, and it’s one of the first places that’s either helped by low rates or held back by higher rates,” Powell said at the June meeting press conference.
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