The rising cost of housing is a major barrier to access homeownership for families across the country, with a market characterized by record year-over-year home price appreciation driven by severely low housing supply. According to CoreLogic Home Price Insights, home prices nationwide, including distressed sales, increased 20.9% in March 2022 from March 2021—one of the highest increases on record for the index. No states posted an annual decline in home prices. The states with the highest increases year-over-year were Florida (31.4%), Arizona (28.7%) and Tennessee (26.7%). Supply of affordable housing, on the other hand, remains at historic lows—an estimated shortage of 3-5 million homes.
Unlike with fuel and food costs, it will take longer to address the housing shortage, and therefore inflation is not transitory. With the Federal Reserves’ anticipated rate increases this year, home price appreciation is expected to moderate by next year to the single-digits, which should begin to help create a better homebuying environment for sidelined borrowers who have been battling soaring prices for several years.