According to recent statistics from real estate company Redfin, it has become increasingly difficult for Americans to buy houses due to the double blow of rising mortgage rates and housing prices. In the four weeks leading up to April 21, the median sales price of homes in the United States reached a record high of $383,725, a 5.2% increase from the same period last year.
Adding insult to injury, while housing prices are on the rise, so are mortgage rates. According to the weekly average data released by Freddie Mac on April 25, the average rate for a 30-year fixed mortgage rose to 7.1%, surpassing 7% for the first time this year and hitting the highest level since November 2023.
At the end of 2023, after the Federal Reserve hinted at a rate cut in 2024, mortgage rates briefly declined. However, with no signs of cooling inflation data in the past two months, it is widely expected that the Federal Reserve will postpone its first rate cut, leading to a steady increase in mortgage rates.
High housing prices and high mortgage rates have pushed the median monthly housing payment to a record high of $2,843, a 13% increase from the previous year.
Redfin reports that the number of new listings has increased by 10.2% year-on-year, but due to stubborn high rates, the momentum of listing growth may be slowing down.
Although housing inventory has improved compared to last year, it remains relatively low, which continues to drive up housing prices.
Redfin’s Chief Economist Chen Zhao advises sellers to “price fairly.” Zhao explains that while sellers may currently fetch high prices, they should be competitive in pricing to attract buyers from the start and avoid having to lower prices later on.
For buyers currently able to purchase a home, Zhao’s advice is to buy their dream home and accept the fact that this year may not be the ideal time for finding a dream deal. If mortgage rates remain high or only slightly decrease, future months may see a slight cooling in housing price growth, but overall housing costs are likely to continue to rise in the foreseeable future.
Rising costs during the spring buying season pose more challenges for buyers. As homeowners typically list properties for sale in the spring, and buyers tend to look at properties as the weather warms up and days get longer, real estate activity in the spring often sees an uptick.
Economists predict that Americans will purchase 4.46 million existing homes this year, a 9% increase from 2023. However, many prospective buyers are still being priced out of the market.
According to CBS, Lisa Sturtevant, Chief Economist of “Bright MLS,” stated in an email that this spring, the increase in mortgage rates and high housing prices have left some buyers in a wait-and-see mode, with “first-time buyers experiencing the most challenging period.”
Buying a home remains a primary tool for American families to accumulate wealth, but the continuously rising housing prices are making it increasingly difficult for ordinary Americans to afford their own homes. According to research from Zillow, the median household income for Americans must increase significantly from $59,000 four years ago to $106,500 in order to afford a typical home purchase today.