In what is typically a slow season for homebuying, January reported red-hot sales activity with a 19.2% year-over-year gain in the average nationwide home sale price, Fortune reports. Rising mortgage rates coupled with low housing inventory created a competitive market for buyers, who went toe to toe for a small share of high-priced homes.
Cities like Phoenix and Tampa recorded year-over-year gains of more than 30%, while other popular Sun Belt metros like Las Vegas and Dallas saw a 25% surge in home prices. If an abnormally energetic winter season is any indication of what is to come in the spring market, buyers should brace for tight competition and more record price gains exacerbated by elevated mortgage rates.
Higher mortgage rates will probably take even more prospective home sellers out of the market. Despite the likelihood of selling their homes for high prices, homeowners have little incentive to do so if it only means they’ll have to buy a new one at a much higher mortgage rate.
The inventory problems probably won’t be solved this year. New home listings for February were down 26% compared to 2021, according to online real estate marketplace Realtor.com. The number of new homes being built is showing some faint glimmers of life. But inventory is expected to rebound only 0.3% through the rest of 2022.
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