Entering the spring home buying season, the U.S. housing market has kicked off with a stunning start: in April, housing prices reached a historic new high, with the median home price in California surpassing $900,000.
This past Friday morning (May 17), real estate brokerage firm Redfin released a new report indicating that in just the past April, the median home price for homes sold across the U.S. rose by 6.2% compared to the previous year, reaching $433,558, hitting an all-time high.
Among many regions, the housing markets in San Jose, California, and Rochester in upstate New York stand out with elevated activity: approximately 75% of homes sold in these two cities last month went for prices exceeding their listing prices.
Experts at Redfin point out that compared to the frenzy of home buying periods in the past, the development of the U.S. real estate market is relatively slow now. The primary reason for the continuous surge in housing prices is the scarcity of available homes for sale.
Data shows that after seasonal adjustments, the number of new listings of homes in the U.S. in April increased by 1.7% compared to the previous month and by 10.8% compared to the previous year. However, it is still about 20% lower than pre-pandemic levels, largely due to many homeowners locking in ultra-low interest rates during the pandemic and opting not to sell their homes.
Peter Kam, the CEO of Qiaofu Real Estate Company, mentioned in an interview with Dajiyuan at the beginning of the month that the lack of available housing inventory is one of the major issues. With over 75% of residential mortgage rates locked in below 3%, most homeowners are reluctant to sell because they cannot find lower rates.
According to Freddie Mac data, for the week ending on May 16, the average 30-year fixed-rate mortgage was at 7.02%, and the 15-year fixed-rate mortgage averaged 6.28%, showing a slight decrease from the beginning of the month.
As housing prices continue to rise, California, as a popular housing market region, is no exception.
The California Association of Realtors (C.A.R.) latest report shows that after seasonal adjustments, the statewide sales of existing single-family homes in April increased by 3% compared to March, and by 4.4% compared to the same period last year.
Meanwhile, in April, the median home price in California reached $904,210, a 5.8% increase from March and an 11.4% increase from April 2023 when it was $811,510. This marked the first time in history that the median home price in California has crossed the $900,000 milestone.
Experts predict that in the coming months, seasonal factors and the scarcity of housing inventory may continue to stimulate further price increases in California.
“Rising sales and prices show the resilience of the California housing market and signal both buyers and sellers adapting to the high-rate environment,” said Melanie Barker, President of C.A.R. “The pace of home sales has accelerated, with nearly half of homes selling above asking prices, reaching the highest level in nine months.”
However, this does not mean that the housing market will continue to develop steadily in this trend. Jordan Levine, Vice President and Chief Economist of C.A.R., believes that although the market showed firm performance in April, as long as the inflation rate remains high and mortgage rates continue to fluctuate, the market will not experience a rapid recovery.
While housing prices are rising across the U.S., the situations in different housing markets vary. Some transactions still allow negotiation, while some sellers are directly reducing prices.
Redfin found that nearly one-fifth of homes for sale in the U.S. in April lowered their prices, meaning sellers reduced their prices after listing the homes.
“Most sellers in Las Vegas are open to negotiations, offering discounts of 5% to 10% off the listing price,” said Fernanda Kriese, a local Redfin real estate agent. “Homes priced below market value receive multiple offers and are sold out within two to four days, while homes priced $5,000 to $10,000 above market value wait 30 to 60 days.”
Redfin’s analysis also pointed out that, like many emerging cities affected by the pandemic, the real estate market in Las Vegas has cooled down after the home buying frenzy of 2021 and 2022. However, other markets have not cooled down as quickly, with some markets experiencing intense competition among buyers, like in San Jose, California, and Rochester, New York.