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Surging US Home Prices: Approaching Record Highs amid Shrinking Inventory

The lack of housing supply, which is severely limiting affordability for many purchasers, has caused home prices in the US to just barely miss reaching record highs last month.

According to Redfin data, the median sales price of a home in June came in at $426,056, a mere 0.6% decrease from the median sales price reported the previous month.

In the last five months, the housing market has experienced the slowest decrease in property prices. Home prices were just marginally 1.5% below the record-breaking median sales price of $432,397 that was set in May 2022.

That’s largely because there aren’t many houses on the market, which has kept prices high over the past year. In June, there were 1,318,154 available homes on the market, a record low and a 15% decrease from the same time in 2022. Moreover, the number of new listings fell to 450,000, a 30.6% decrease from levels from the previous year.

Redfin data reveals that the current housing supply is the lowest it has been since the epidemic, at barely 1.8 months.

Moreover, buyers have grown accustomed to paying higher mortgage rates, which has made the inventory shortfall worse. According to the Mortgage Bankers Association, demand increased modestly in June, with mortgage applications rising in three of the four weeks of the month.

“Homebuyer demand has bottomed out,” Daryl Fairweather, the chief economist at Redfin, said in a statement on Monday.. “High rates are still giving a lot of buyers pause, but the sticker shock is no longer as severe as it was when rates skyrocketed last year. With home prices back near record highs, buyers are also less worried that they’ll buy a house that’ll plunge in value.”

Read Also: Inflation’s Impact: US Consumers Tighten Back-To-School Budgets Amidst Rising Costs

Housing Market Stagnation: Buyers and Sellers in Limbo

us-home-surging-prices-record-high-low-inventory
The lack of housing supply, which is severely limiting affordability for many purchasers, has caused home prices in the US to just barely miss reaching record highs last month.

The housing market has been in a state of limbo for the past year due to high mortgage rates, which have kept both buyers and sellers out of the market because the cost of borrowing is still high. Until now, high mortgage rates have largely discouraged purchasers, which has decreased demand. Meanwhile, homeowners have been advised against putting their homes on the market since many of them want to hold onto the record low borrowing rates that they secured during the past 15 years.

Due to these developments, purchasers now face an affordability hurdle that won’t likely be removed until mortgage rates begin to decline once more, according to analysts.

Robert Reffkin, CEO of Compass, predicts that rates will need to drop back to the 5% level before new inventory enters the market. In the meantime, according to Freddie Mac data, the 30-year fixed mortgage’s average rate crept closer to 7% in the previous week.

Read Also: Breakthrough Agreement: Texas House and Senate Forge Consensus on Property Tax Reduction, Resolving Prolonged Deadlock

Source: Business Insider

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