- Home prices have remained stable in a market short on supply this year.
- And an economist at Goldman Sachs says there’s going to be no relief for potential home buyers this winter.
- David Mericle said “prices are unlikely to fall meaningfully” due to supply shortages.
Potential home buyers should not count on prices falling this winter – because not enough properties are being put up for sale, according to a top economist at Goldman Sachs.Thank you for reading this post, don't forget to subscribe!
“A supply shortage is unlikely to cause a meaningful decline in prices,” David Mericle, chief U.S. economist at the bank’s global investment research division, told Yahoo Finance. Single-family homes are likely to be hardest hit by the crisis, he said.
“Affordability has gone down substantially – first prices went up a lot, then mortgage rates went up a lot, the cost of financing less occupied housing is much higher than it was several years ago. But because of the lack of supply, I think “With the market still being where we are, prices will clear up,” Mericle said.
“In response to the big change in rates we have seen this year, we are expecting a slight decline in prices, but a slight increase next year – so no big changes from here.”
The decline in inventory levels has pushed home prices higher this year, leaving the U.S. with a shortage of 1.5 million to 5.5 million homes, according to estimates by the Biden administration and the National Association of Realtors.
Meanwhile, the Federal Reserve’s aggressive interest-rate hikes have pushed the average 30-year fixed-rate mortgage north of 7.5%, according to data from Freddie Mac — and that’s likely to put further pressure on overall supply.
Many homeowners are choosing to stick with the historically low rates they were previously locked into. According to Redfin data, only 1% of Americans sold their homes in the first half of this year.