There are no more homes to buy

There are no more homes to buy

Housing will likely continue to rise further, despite the Fed's efforts to calm the market.

 The supply of homes for sale has fallen to record lows in recent months — and even if you can win the bidding war on one of them, the cost of your mortgage is on the rise.

Home prices have increased over the past two years as home-grown Americans have taken advantage of record-low mortgage rates.

That boom made housing much less expensive for home buyers and renters alike, with housing emerging as a significant source of inflationary pressure baffling Americans.

According to the National Association of Realtors, the current home price jumped from about $275,000 at the end of 2019 to $358,000 in December 2021.

The Federal Reserve recently indicated that it would raise interest rates to clamp down inflation. Mortgage rates jumped sharply in response.

According to Freddie Mac, the average 30-year fixed mortgage rates rose from 2.98% in November to 3.55% late last month.

By itself, this increase would add nearly $200 to the monthly mortgage payments over the median home price in the United States, according to Standard & Poor's estimates.

In theory, higher mortgage rates should help cool the housing market by making housing a little more expensive and effectively shrinking the world of potential buyers.

Yes, but: in practice, housing prices - like all market prices - are a tango between supply and demand. Currently, there is hardly any offer for homes for sale.

There were only 790,000 single-family homes for sale in December, an all-time low.

"We're already seeing meager stocks this winter," Jeff Tucker, chief economist at Zillow, told Axios. "The shelves look empty from the perspective of home shoppers."

For now, analysts seem to believe that the mismatch between the crowds of potential buyers and many homes for sale favors higher prices in the future.

"We continue to believe that demand will outpace housing supply," Goldman Sachs analysts wrote in a recent note. "And we continue to expect an annual [home price increase] of 10.1% for the full year 2022."