In the rollercoaster of a year that is 2023, only 1% of US homeowners decided to sell their homes during the first half, pushing the number of available homes for sale to a record-breaking low.

The housing market has recorded the lowest turnover in over a decade, with a paltry 14 out of every 1,000 existing homes changing hands during this period, according to a fresh report by Redfin. Buyers are left grappling with a market that’s 28% leaner in options compared to pre-pandemic times, starkly contrasting with the first half of 2019 when 19 out of every 1,000 homes were sold.

This deepening scarcity of homes is a key contributor to the current housing supply hitting an unprecedented nadir last month. June saw a meager 1,318,154 homes up for grabs, marking a 15% plunge from supply levels a year prior.

What’s causing this scarcity? A strong player is an escalation in mortgage rates, prompting the majority of homeowners to hold onto the historically low rates they secured over the last 15 years. Consequently, the pandemic-induced housing boom has significantly drained the supply of homes for sale, with a whopping 90% of homeowners with mortgages now enjoying an interest rate below 6%, as per a previous Redfin report.

As Redfin’s deputy chief economist Taylor Marr noted, the sudden rise in mortgage rates has put many potential home buyers in a tough spot by holding back inventory and hiking up prices for the homes that do make it to market. Post-pandemic home prices are now standing around 40% higher than before.

The inventory crunch has supported surging home prices over the past year, even as high rates put a damper on demand. Median home prices came close to a record high in June, reaching $426,056, which is just 1.5% short of the record median home price of $432,397 set in May 2022.

Marr speculates that if mortgage rates could tumble closer to 5%, it could alleviate some of the affordability crisis by freeing up some inventory and reducing monthly mortgage payments. However, most experts predict that significant rate reductions are unlikely in the near future. Mortgage rates are largely influenced by real interest rates in the economy, which are expected to remain high this year as the Federal Reserve continues its hawkish stance on inflation.

Previously, Marr predicted a slight easing of rates on the 30-year fixed mortgage to 6% by year-end. But this is just a marginal dip from the current levels, as the average 30-year fixed mortgage rate climbed to 6.96% last week, according to Freddie Mac data.

For the entrepreneur and investor readership, this paints a vivid picture of the state of the housing market. It highlights the need for adaptive strategies and a keen eye on the evolving landscape amidst fluctuating mortgage rates and inventory levels.