Signs of housing bubble rekindled in the US housing market

BORNews - US home prices have risen to new highs. Economists say there are signs that a "bubble" is forming in the US housing market.

The amount of available homes in the US is becoming scarce, house prices have been pushed up continuously for many months, the number of homes for sale is at a record low. Experts fear that a "bubble", usually rare, may be forming in the US.

According to Business Insider, a housing "bubble" occurs when house prices artificially rise. Home prices in the US increased rapidly due to high demand, especially when the US Federal Reserve (FED) in March raised interest rates, causing home loan interest rates to increase.

In the US, the number of available houses is increasingly scarce, house prices have been continuously pushed up for many months.

CNN quoted the Fed as saying that unusual signs are appearing in the US housing market, like in 2000 and 2007, when the bubble occurred. This raises concerns that a similar scenario will soon emerge where house price increases are not tied to economic fundamentals or in short virtual increases.

Buyer psychology has a great influence and is a cause of high house prices in the US. Many buyers believe that current house prices will continue to rise, so they are afraid of missing the opportunity to buy a home when the price is low and will have to buy it at a higher price later.

Reuters published an article stated that first-time home buyers in the US were desperate because of high prices. Many people bring all their savings, combined with improved credit score, but still isn't enough to apply for a home. Many complain that they are being overpaid for their home.

According to Fortune, there added burden to homebuyers as mortgage rates rose 24% in March. That was the fastest 4-week mortgage rate increase in history in the US. Homebuyers now have to pay higher interest rates, averaging 4.67% on 30-year fixed-rate mortgages.

In the upcoming meeting, the US Federal Reserve will likely continue raising interest rates. This tightening financial policy will put more pressure on homebuyers, especially first-time homebuyers.