The housing market has frozen over. Here’s why experts say home affordability isn’t getting better any time soon.

• The housing market is frozen, experts told Insider, and affordability is unlikely to improve soon.

• Activity slowed due to rising mortgage rates, which drove buyers and sellers out of the market.

• But rates are likely to remain high as the Fed monitors inflation.

Real estate experts say the housing market is frozen as mortgage rates and home prices continue to rise — and while affordability should improve slightly, it’s not likely to improve dramatically anytime soon.

Despite the slight downturn in mortgage rates and home prices in recent months, neither is likely to drop significantly over the next two to three years, Jeff Ostrovsky, a mortgage analyst at Bankrate, told Insider. This causes problems for young people Homebuyers who have been kept out of the market.

This is largely because the Federal Reserve is expected to keep interest rates high over the next year, which will influence mortgage rates to remain high.

Meanwhile, higher mortgage rates will prevent existing homeowners from listing their homes, as many financed their purchases years ago when rates were historically low, and selling now could mean financing a new purchase at a higher rate. probably Keep inventory low and house prices high.

“Nobody really expects mortgage rates to go down that much,” said Ostrovsky, who predicted rates would stay between 5%-6% over the next year. “It’s a tough market as there will be more buyers than sellers for the foreseeable future. And when that’s the case, it’s hard to see prices really go down.”

Redfin’s deputy chief economist, Taylor Marr, has seen the housing market stagnant, and predicted mortgage rates will ease slightly to around 6% by the end of the year. Meanwhile, home prices are estimated to have fallen considerably, with only a slight decline remaining before bottoming out in June.

“It seems like rates don’t really change that much and interest rates don’t change that much,” Marr told Insider. “We’ve described it as a kind of musical chairs game, where most of the participants are just in their seats, and once people start getting out of their seats, there will be affordable housing opportunities.”

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Housing in limbo

It’s a precarious time for the US housing market, as activity has slowed significantly in recent months as the Federal Reserve aggressively raised interest rates. As the price on a 30-year mortgage — America’s most popular home loan — remains near 20-year highs while rates are stuck at elevated levels, affordability has been crushed for many potential buyers.

Although some experts sounded the alarm last year about the massive drop in home prices, the low inventory has kept them going higher.

The result has left the market in limbo, with both homebuyers and sellers out Unwilling to enter the market Unless mortgage rates go down.

“A year ago it was insanely expensive. And maybe now it’s insanely much less expensive,” said Marr.

Although some pockets of the housing market have seen a Significant enough decline in housing prices To revive sales, affordability issues are currently receding 73% of potential American homebuyersBankrate said in a recent report.

Mortgage rates — and likewise the affordability of homes — depend on future Fed interest rate movements and any subsequent fluctuations in the price markets. Fed Chairman Powell suggested Prices will remain high throughout the year Whereas the central bank is watching inflation, while the markets are looking at strong odds what the central bank can do Cut interest rates as early as its meeting in July.

Read the original article at Business interested