NEW YORK, Nov 22 (Reuters Breakingviews) – The U.S. housing market is destined to keep sliding. The highest mortgage rates in 15 years have stifled demand, leading the pace of existing home sales to slow 31% since January. An influx of new supply should depress prices from pandemic-era highs, but affordability will be squeezed well into 2023.

Hot markets are cooling off. House prices in Phoenix, for example, have fallen 8% since June, per S&P CoreLogic Case-Shiller data. The national average has dipped only 1.5% over the same span, however, and sits 13% higher than a year ago.

Some fresh inventory is appearing, with new home supply rising to 462,000 in October, according to the latest Census Bureau report. Such additions should help bring prices down, but not enough to swing the equilibrium.

Pricey loans are spooking buyers. The average 30-year mortgage costs 6.6%, more than twice what it did in January, ballooning this year’s typical monthly mortgage payment to $2,300 from $1,500. And even though economists broadly expect the U.S. Federal Reserve to slow the rate of interest rate hikes, government-backed mortgage buyer Freddie Mac reckons that U.S. home loans will cost about 6.4% through 2023.

To continue reading the rest of the article, please click on the source link below:

https://www.reuters.com/breakingviews/us-housing-faces-longer-descent-basement-2022-11-22/