As February comes to a close and the new administration has taken office, the housing market has shifted in inventory. According to the National Association of Realtors, the housing inventory is experiencing the lowest levels since 1999.
The shortage of inventory has resulted in financial stock prices which have lead to higher bond yields and higher mortgage rates. Any time rates rise, there are effects on refinancing and home purchases. Existing home sales have experienced a decrease.
As home prices increase and rates rise, new home buyers will have a harder time moving up. Furthermore, these buyers are not adding homes to the inventory thus contributing to the shortage. Year end data reveals a sharp fall in sales while prices are up against a record breaking high.
What does this mean for the future?
If the economy advances and fiscal policies add to inflation pressure, then rates will continue to increase which could potentially hurt the housing market. On the other hand, if the economy contracts, combined with inflation pressure, then rates could potentially fall again.
Are these all time lows just part of a changing administration or could this be a warning sign for the future?