Home Price Growth Returns to Pre-Pandemic Levels, But Market Faces Affordability and Supply Headwinds

Home price growth has returned to pre-pandemic levels of around 0.6% per month or 5-6% annually. However, the market is very different due to unaffordability and low inventory.

Transaction levels are at recessionary lows despite a small rebound in February, largely due to high mortgage rates and limited supply.

New listings ticked up 5% year-over-year but supply is still far below pre-pandemic levels. The small boost is largely seasonal.

The mortgage rate lock-in effect is loosening its grip somewhat, leading slightly more homeowners to list their homes despite higher rates.

Mortgage rates may decline later this year as the Fed cuts interest rates, while home prices are expected to remain flat nationally.