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U.S. Home Prices Hit Historic Highs

U.S. Home Prices Hit Historic Highs

Apr 26, 2024

U.S. Home Prices Hit Historic Highs

In a recent press release, Redfin announced that the median U.S. home-sale price has reached a record high of $383,725, marking a significant increase of 5.2 percent from the previous year. This surge represents one of the largest price jumps since October 2022. Coupled with this escalation in home prices, the average weekly mortgage rates have also climbed to 7.1 percent, the highest rate since November of the prior year, as a response to the Federal Reserve's indication of maintaining higher interest rates for an extended period.

Consequently, the median monthly housing payment has soared to a record $2,843, a 13 percent increase year-over-year. Even though new listings have seen a 10.2 percent rise for the year, the overall inventory of available homes for sale remains low, while demand persists despite the daunting mortgage rates.

Redfin Economic Research lead Chen Zhao advises, "My advice to sellers is to price your home fairly...they should price competitively to attract buyers from the start and avoid having to drop their price." Zhao further cautions buyers that the current year may not yield "a dream deal" due to the high costs, suggesting that housing costs will likely stay elevated.

Amid these conditions, many homebuyers are turning to all-cash purchases, with 34.5 percent of homes bought in February being all-cash sales, an increase from the previous year. This shift is in part to circumvent the impact of high mortgage costs. However, first-time homebuyers, lacking equity from a previous home sale, find themselves disadvantaged in the current market.

Zhao comments on the broader socioeconomic impact, stating, "High mortgage rates are widening the wealth gap...creating a reality where in many places, wealthy Americans are the only ones who can afford to buy homes." This dynamic is undermining the opportunity for homeownership, which is traditionally a significant avenue for wealth accumulation across generations.

Reflecting on the market dynamics, a Redfin survey from April 23 revealed that 38 percent of current homeowners doubt their ability to afford a home in today's market. This sentiment is particularly poignant considering the median U.S. home price has doubled over the last decade, with a 50 percent increase in just the past five years.

Redfin senior economist Elijah de la Campa acknowledges the benefits for current homeowners, but also recognizes the challenges for prospective buyers, "On the other hand, price appreciation makes the prospect of buying a new home daunting or even impossible for many people who want to move."

The financial landscape now requires U.S. citizens to earn over $100,000 a year to afford a median-priced home, as per a Bankrate analysis. Jeff Ostrowski, a Bankrate housing market analyst, emphasizes that "Affordability is the biggest issue—finding a home that’s in your budget."

In addition, Zillow's analysis points to an increase in the number of American cities with average home values of $1 million or more, now totaling 550. California leads with 210 such cities, followed by New York and other states.

Looking ahead, housing costs are not projected to decline significantly, with the possibility of further mortgage rate increases due to persistent inflation. Lawrence Yun, chief economist at the National Association of Realtors, provides context, "March inflation figures were very bad, which also means bad news for interest rates."

The current state of the U.S. housing market indicates that, despite the increase in new listings, the combination of high home prices and mortgage rates is likely to sustain a challenging environment for prospective homebuyers, particularly affecting first-time buyers.

The Epoch Times Article


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