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Inflation is at a 40-year high, and the average consumer is spending $500 more a month on living expenses than a year ago. As such, home buyers may need to lower their budgets to keep pace.
House hunters would be smart to search for a home that is about $40,000 cheaper than they would have a year ago as a result of the rising costs, Gay Cororaton, research economist at the National Association of REALTORS®, writes on the association’s blog.
“The increased cost of spending on other items impacts the ability of the average consumer to have enough leftover income to purchase a home,” Cororaton writes.
Rising inflation, higher mortgage rates, and a tighter supply of housing available for sale are expected to soften housing demand this year. Lawrence Yun, NAR’s chief economist, has predicted home sales to decrease by 10% in 2022. Home prices, however, are expected to continue to increase about 5% due to the low inventory of homes for sale.