US new home construction data revealed a decline in March, further tightening the already strained housing inventory. This development adds to the ongoing challenges faced by both homebuyers and sellers as they navigate the current market dynamics.

High interest rates have made it increasingly difficult for prospective homebuyers to afford the purchase of a new property. Similarly, homeowners looking to sell are finding it challenging to time their transactions, as the elevated borrowing costs and mortgage rates discourage potential buyers from entering the market.

Yahoo Finance's Dani Romero breaks down the details.

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This post was written by Angel Smith

Video Transcript

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- Got some economic data for you, folks. New home construction falling in March, which means less inventory for houses and higher prices for what's available. And if you can't afford a home, it might not be entirely your fault. People aren't moving because it's so expensive to move out of their current homes, thanks to high interest rates. So to break down the math here and make the math math, we've got Yahoo Finance's reporter Dani. That's what they say, right?

DANI ROMERO: Well the math ain't mathing right now, Brad. So it's really not financially smart right now to sell your home. And there's new research out from Intercontinental Exchange, a data service that really drives this point home. On average, buyers who are looking to move into a pricier home pay about $400 more for this home.

But now, buyers who are looking for these pricier homes or moving into these pricier homes are going to have to pay about $1,300 more. Now, that's really not attractive and not really convincing homeowners to really say, hey, I want to move right now, and that really is affecting the inventory, the homes that are for sale.

And for buyers who did take out a mortgage in 2020 and 2021, either by buying or refinancing their mortgage, well, you know, you're going to have to be paying a lot more, about 132% higher. Your mortgage payment will go up, and that's relatively around $1,300 more for an upgrade on a home.

So now, what about the equity that you earned on your home? Yes, if you roll that over and you purchase a pricier home, yes your monthly mortgage payment could go down, but on a percentage basis, it still doesn't pencil out, Brad. One of the key factors from this research they're really pointing to the fact is, lower mortgage rates will really drive a lot more inventory, could push those prices down, and obviously, more people will be flooded into the housing market.

But again, mortgage rates right now, if we look at them, they're hovering around 7.5%. And Redfin reported that 75% of homeowners have a mortgage rate below 5%. But the outlook, really, on mortgage rates doesn't look good, as we've seen these inflation numbers higher than expected. And home prices is still another factor in all of this equation. Inventory is down 40% from prepandemic levels.