Housing affordability isn't improving soon as the market faces a decade of undersupply, Realtor.com economy says

• Housing affordability isn't improving anytime soon, Realtor.com economist Danielle Hale said.
• Hale expected home prices to dip just 0.6% this year, while mortgage rates might only ease to 6%.

Housing affordability isn't improving soon for prospective home buyers, thanks to the high cost of borrowing and the undersupply of homes built over the past decade, Realtor.com's Danielle Hale said.

In an interview with CNBC on Friday, the chief economist pointed to the precarious state of the housing market, with demand far outstripping supply.

That's largely due to high mortgage rates, which have discouraged existing homeowners from listing their properties for sale, as many cling to low mortgage rates they locked in during the last decade of ultra-low interest rates.

Meanwhile, the housing market is slammed with nearly a decade of underbuilding, Hale said, pointing to falling construction activity in the aftermath of the 2008 housing crisis. She estimates that the market is currently short about 6 million homes. Considering that the US builds around 1 million homes a year, it could take years for builders to catch up.

That's exacerbated by the fact that the largest number of millennials turned 30 in 2020 – a sign that the generation has entered their prime homebuying years. The result is heightened competition for homes, and a supply-demand imbalance that is keeping prices elevated even as mortgage rates stay high.

Hale expected prices to ease slightly this year, with Realtor.com recently revising its forecast from a 5.4% price increase to just a 0.6% price decline.

"Affordability just isn't there for buyers, especially with mortgage rates remaining as high as they have been," Hale said. "The fact that [home prices] are not down more is surprising some analysts, but when you've got households that are looking for a place to go, and rental vacancies also relatively limited, and rent's still relatively high, it's just hard to find a place to live whether you're trying to rent or buy this year," she later added.

Experts have said affordability won't improve until mortgage rates pull back, which could lead to a flood of existing home inventory hitting the market. But that's unlikely to happen anytime soon. The average rate on the 30-year fixed mortgage inched up to 6.71% this week, according to Freddie Mac. Mortgage rates are likely only to ease to 6.1% by the end of the year, per Realtor.com's latest forecast.