Early in the pandemic, ultra-low mortgage rates fed fierce competition for the few choices on the market, pushing sale prices relentlessly higher. But now things are swinging in the other direction: mortgage rates have surged, blowing up monthly payments to the point where some prospective buyers are simply walking away. While the swelling inventory has yet to translate into any price relief—the median price of new homes sold rose to a new high of $450,600 in April—it may only be a matter of time, according to economists. The pendulum could even swing too far in the other direction, causing an economic recession, according to James Knightley, chief international economist at ING. “Inventory for sale is rising rapidly, which suggests we are moving from an environment of excess demand, seen since the start of the pandemic, to one of excess supply,” Knightley wrote in a commentary. “This is bad news for home prices and economic activity.” Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!
