Historic low mortgage rates spurred a housing frenzy two years ago and provide a floor for how low home prices can drop today, according to Zillow.
Home prices gaining as supply remains low
Low mortgage rates are also behind one of housing's biggest challenges right now – a lack of inventory, according to Zillow. Homebuyers are reluctant to trade in their existing low rates for today's higher financing costs, which has created a shortage of existing housing supply. New listings in June trailed pre-pandemic norms by about 25%, and there are fewer homes available for sale today than any year in recent memory at this time of year, including the ultra-low inventory environment of 2021 and early 2022, according to Zillow.
Sales volume has slowed as a result of limited housing supply. The seasonally adjusted annualized rate of existing home sales fell to 4.16 million in June, the series' fourth decline in five months and an 18.
. "Price appreciation is back to normal after a short reset, but that means buyers still face serious cost challenges and competition, especially for the most affordable houses and in less expensive markets."
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