Because of high mortgage rates and a persistent housing shortage, the vast majority of homes in the United States are overpriced.

Homes were overvalued by 11.1% at the end of 2023, according to a recent Fitch Ratings analysis, a tendency that was observed in roughly 90% of U.S. metro regions.

However, in a few Southern states, the increase in properties sold at prices above the long-term average was notably higher.

The states with the biggest increases in overpriced homes were Tennessee, Arkansas, and South Carolina, followed by Montana and Alabama.

The nation’s housing shortage was caused by years of underbuilding, and it was later made worse by the sharp increase in mortgage rates and the high cost of building supplies.

According to a another Realtor.com survey, the quantity of available homes is still startlingly lower than it was before to the start of the COVID-19 epidemic in early 2020—down 34.3%.

The property market has also experienced a “golden handcuff” effect as a result of higher mortgage rates during the previous three years. Since the pandemic started, sellers who locked in a record-low mortgage rate of 3% or less have been hesitant to sell, further reducing supply and providing few choices for eager would-be purchasers.