Home Buyers Brace for Frozen Housing Market as Mortgage Rates Hit 23-Year High

High Mortgage Rates and Limited House Listings Freeze Housing Market; Millennials Face 1980s Déjà Vu

With mortgage rates hitting a 23-year high of 8%, a combination of higher costs, low inventory and a decrease in mortgage applications have contributed to a slowdown in the housing market, reminiscent of the housing recession in the 1980s.
Research from Morgan Stanley reveals that a high mortgage rate's impact remains significant, with the monthly payment on a median-priced home increasing 38% over the past year.
Increased interest rates are also impacting first-time homebuyers, pushing up the annual income required to afford a median-priced home to $81,360, $8,120 more than the previous year.
Despite the challenging market, some experts suggest that the millennial generation reaching a prime homebuying age could support home prices due to the significant demand against limited supply.
However, the current affordability crisis has also led to a sharp drop in home sales, with predictions for total existing-home sales to only reach 4.1 million in 2023, a significant reduction from the over 6 million home sales in 2021.