Despite what the media says, the housing market could remain strong for years to come.
Though it is widely believed that housing prices fall when interest rates rise, the stats tell a different story. In a housing chart dating back to 1987, U.S. house prices increased every time the Fed hiked rates. Even during the recent hike cycle, house prices appreciated the fastest in decades, challenging the consensus.
Housing has religiously followed this pattern for over 100 years, and long-term analysis by Casey Research suggests house prices won’t peak until 2025.
Mortgage rates are at their highest in 20 years, which have driven down prices in some areas around the country. Still, as supply is constrained, housing prices in many U.S. markets have yet to level off.Â
Some experts see two fundamental factors supporting house prices until the mid-decade. Housing inventories are 2.8 million units lower than their 2008 high, and nobody in America wants to refinance at higher interest rates. Hence, they believe the housing market could remain strong until 2025 if nothing changes.
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On the date of publication, Andy Mukolo did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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