FILE PHOTO: Carpenters work on building new townhomes that are still under construction while a shortage in building material supplies continues across the country. Here, ongoing work on a Tampa project, May 5, 2021. REUTERS/Octavio Jones/File Photo

Consumers have started to retreat from plans to buy homes, according to a recent survey, likely due to rising mortgage rates, combined with soaring prices.

Home purchasing has become increasingly unaffordable, especially for first-time buyers, but data also indicates fewer consumers plan to buy cars and other big-ticket items over the next six months.

In addition, they were not keen on vacations, with those planning to go on holiday at the lowest level since June 2021, according to the survey from the Conference Board, which measures consumer confidence in a monthly report. 

Another report showed the S&P CoreLogic Case-Shiller’s 20 metropolitan area home price index rose 18.6% year-over-year in December. Prices already had advanced 18.3% in November.

San Diego and Los Angeles both showed strong price appreciation, but Phoenix led the way. Prices there have shot up 32.5% over the past year.

Record-low housing supply is driving up prices. The backlog of homes approved for construction, but yet to be started is at an all-time high as builders struggle with shortages and higher prices for inputs like softwood lumber, as well as cabinets, garage doors, countertops and appliances.

There is a migration from metro areas with expensive homes to areas in the Mountain West and South regions, where houses are relatively more affordable. The migration, fueled by both remote work and strong regional economies, also factors in rising house prices, analysts and realtors say.

“The influx of new investment is pulling in new residents from the Northeast, many of whom have sold homes at prices well above the median in Tampa and Miami, which allows them to bid aggressively for the paucity of homes that are on the market,” said Mark Vitner, a senior economist at Wells Fargo.

Strong house price inflation was reinforced by a report from the Federal Housing Finance Agency showing home prices increased 17.6% in the 12 months through December after a similar gain in November.

There were big gains not only in the Pacific region, but also in the Mountain, South Atlantic, South Central and New England regions.

Though mortgage rates are near three-year highs, they are expected to remain low by historical standards.

“Consequently, house prices will extend their upward trend in 2022 driven by a combination of limited supply and steadily rising demand,” said Brent Campbell, an economist at Moody’s Analytics.

– Reuters and staff reports