Goldman Sachs: Declining inventory puts pressure on real estate market, home prices will rise

At the same time, the Federal Reserve has aggressively raised interest rates since March 2022 in an attempt to curb inflation, making borrowing more expensive. The average 30-year fixed-rate mortgage rose from 3.8 percent to 7.6 percent over the same period, according to''s Freddie Mac data.

Homeowners have chosen to hold on to the historically low rates they have recorded over the past 15 years. In the first half of 2023, only 1% of Americans have sold their homes. Goldman Sachs noted that one of the benefits of the current tight real estate market is that there will be no repeat of 2008, when real estate prices fell 20% relative to their peak after the financial crisis. Karoui's team noted that comparing the conditions that led to the sharp correction in real estate prices after the last real estate market crash, they believe that market conditions are now much more stable, citing better credit standards and the end of complex financial instruments such''as secondary mortgage bonds as factors that will prevent such a collapse.