The Sky-High Housing Demand Is Far From Over

Many home shoppers and homeowners worry that prices have been artificially inflated over the past couple years. These rising prices have largely been driven by a supply-demand imbalance. However, it doesn’t look like this dynamic is going away any time soon.

The demand remains very strong as many homebuyers rushed to benefit from low mortgage rates in the winter. In fact, mortgage rates have actually increased, and the persistent imbalance between demand and supply has pushed up home prices.

The rise in mortgage interest rates over the past few weeks would suggest that demand for homes might cool and home prices might drop due to the higher cost of financing. However, the market has actually observed the opposite.

An influx of newly built homes could potentially help the housing market in the long term. But there most likely won’t be a boom in new inventory this year or next. This is because builders simply can’t construct new homes fast enough to keep pace with buyer interest.