Why Are US Home Prices Soaring Despite High Interest Rates Above 7%?

Supply Shortage Causes
Decrease in Existing Home Listings Due to High Interest Rates

Despite the ongoing high interest rates, U.S. home prices have continued to rise this year. Due to the impact of supply shortages, the upward trend in home prices is expected to continue next year as well.

According to major foreign media on the 2nd, housing prices across the United States have increased by 5.3% so far this year. According to the CoreLogic Case-Shiller Home Price Index, which measures the average home price trends in major U.S. cities, home prices that had declined until January this year have been rising for six consecutive months since February.

By city, Chicago (4.4%) saw the largest increase in home prices, followed by Cleveland (4.0%) and New York (3.8%).

Craig Lazzara, Managing Director at S&P Dow Jones Indices, said, "Out of the 20 states surveyed, 10 states recorded all-time highs."

The supply shortage caused by a decrease in existing home listings due to high interest rates is analyzed as the cause of the rise in home prices. The sharp increase in mortgage rates has prevented demand from selling current homes and buying new ones, resulting in a continued shortage of existing home inventory.

Poor housing construction activity during the pandemic has led to a shortage of new home supply, with the current supply of new homes reduced to half the level of July 2019, before the pandemic.

According to Freddie Mac, a U.S. government-sponsored mortgage company, the average interest rate on 30-year fixed-rate mortgages was 7.19% as of the 21st. This is the highest rate since December 2000.

U.S. real estate information company Zillow predicted, "Due to high mortgage rates and supply shortages, U.S. home prices are expected to rise by about 6.5% until July next year."

This content was produced with the assistance of AI translation services.