CNBC "The Heated US Housing Market Will Cool Down"

Photo by CNBC

[Asia Economy Reporter Yujin Cho] The heat of the U.S. housing market, ignited by the COVID-19 pandemic, is cooling down due to high prices and low supply, according to U.S. economic media CNBC on the 2nd (local time).

The Mortgage Bankers Association (MBA) announced on the 2nd (local time) that mortgage applications decreased by 4.0% compared to the previous week. This is the lowest level since February last year.

Interest rates remained at a low level. The average 30-year fixed mortgage rate was 3.17% last week, maintaining a level below 3.20%, but it is still 20 to 30 basis points higher than the historic lows seen in the latter half of last year.

CNBC pointed to high home prices and low inventory as the causes of the decline in housing demand.

Joel Kan, an economist at MBA, analyzed, "Buyers are hesitating to purchase due to a decrease in housing inventory, a shortage of new home supply, and a sharp rise in home prices."

The U.S. housing market has shown a solid trend since the COVID-19 pandemic last year, supported by supply shortages and historically low interest rates.

Demand for moving due to the spread of remote work and the rise of young people in their 30s have driven up home prices, becoming the driving force behind the housing boom.

The Wall Street Journal (WSJ) predicted that the U.S. real estate market heat last year was the hottest in the past 14 years and that home prices would see a greater surge than during the 2006 boom.