This growth is being driven by many factors including a strong economy, historically low mortgage rates, and continued demand for housing across the country. While some experts have cautioned that the current housing boom may be approaching its peak, others believe that the market still has room to grow.
The current housing market has seen an impressive surge in both prices and home sales. The median home price has increased by 5.5 percent since last year, according to the National Association of Realtors, while existing-home sales increased by 7.4 percent. This strong growth can be largely attributed to the strong economy, which has seen GDP growth of 4.2 percent in 2018 and unemployment hitting a 50-year low. This has allowed more Americans to feel confident about investing in a home, as they are now more likely to qualify for, and afford, a mortgage.
In addition to strong economic conditions, the current housing boom has also been fueled by historically low mortgage rates. According to Freddie Mac, the average interest rate on a 30-year fixed rate mortgage is currently under 4 percent, significantly lower than the historical average over the past fifty years. This has encouraged more buyers to take advantage of these low rates and purchase a home.
The continued high demand for housing has also played a key role in the current housing boom. With population growth continuing to outpace the supply of homes, buyers are pushing up prices as they compete for available homes. This demand is particularly strong in urban areas, where there is an ongoing “urbanization” trend. As more young professionals, families, and retirees look to move into cities, the demand for urban housing is outpacing the available supply.
Despite all of these positive indicators, some experts caution that the current housing boom could be nearing its peak. They worry that the combination of rising prices and interest rates could eventually put a strain on homebuyers, making housing unaffordable for many. There is also a fear that if the economy begins to slow, the current housing market could suffer.
Overall, the United States housing market appears to be in the midst of an unprecedented housing boom. Thanks to a strong economy, historic low mortgage rates, and continued high demand for housing, prices and sales have both increased significantly over the past year. However, with economists predicting further increases in mortgage rates, some experts are warning of potential problems in the future. It will be important to keep an eye on the market and make sure that the current growth is sustainable in the long-term.
This article was contributed on Jun 29, 2023