The U.S. housing market is beginning to float back down to Earth following its pandemic-driven success. Recent data is beginning to show the market is returning to its pre-pandemic levels.

With COVID-19 raging throughout the country, many people were eager to leave big cities such as New York and Chicago and head for the suburbs. The prices may have been high, but the interest rates were at an all-time low.

The market is now beginning to cool off due to a drop in inventory and a lack of building supplies. This has resulted in prices becoming out of reach for those who are looking to buy a home.

“The housing market isn’t caving just yet. Have we reached a peak? That’s a possibility, but worst-case scenario, I see a leveling off,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

The National Association of Realtors reported Thursday that sales of previously owned homes have risen 1.4% to 5.86 million in June at a seasonally adjusted annualized rate, although the rebound was weaker than expected. The number undershot the consensus by 40,000 units and followed May’s revised 1.2% decline.

The lack of inventory has provided opportunities for home building, but that support is beginning to fade. Groundbreaking on new residential homes is up 6.3% but building permits are down 5.1% -- an eight-month low.

On Monday, the National Association of Homebuilders reported higher input costs and rising prices are driving potential homebuyers away. Mortgage demand has dropped 4% in the past week and loans to purchase homes are down 18% from the same week last year.

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