Low housing starts and inflation are creating a challenging market for home buyers.
In response to inflation, Federal Reserve Chair Jerome Powell announced a three-quarters-point increase in federal interest rates.
As interest rates and inflation climb, so do mortgage rates, according to an analysis by bankrate.com.
Bloomington realtor Steve Smith said that rates are now a little above 6 percent, where they used to be closer to 3.
“And that really impacts a lot of people when they go to buy combined with how houses have continued to increase in value,” Smith said.
The increase in value is caused by scarcity of supply. Housing starts decreased by 14.4 percent in May, according to a news release by the Census Bureau.
Smith said this decrease in available houses is making the market hyper-competitive.
“It’s pushing out new homebuyers, and kind of pushing them towards rental,” Smith said.
READ MORE: Home Scarcity Sits At Center Of Bloomington's Hot Housing Market
Bankrate.com said borrowers are continuing to feel the pressure, as mortgage rates change and house prices rise.
