04/29/2024 / By Laura Harris
A new report from real estate company Redfin warns that the cost of buying a house in the United States has increased by 5.2 percent due to rising mortgage rates, soaring home prices and persistently low housing supply.
According to the report, the median home price in the U.S. is now at $380,250, which is just $3,095 shy of the all-time high set in June 2022, as mortgage rates and prices continue to rise. This increase during the four weeks ending on April 21, marks a significant increase of 5.2 percent from the same period in 2023 and is one of the largest recorded four-week leaps in home prices since October 2022.
In turn, the median monthly housing payment for homebuyers has hit a record $2,775, reflecting an 11 percent increase year over year. In the week that ended on April 21, the average 30-year fixed mortgage rate climbed to over 7.4 percent, marking its highest point since November. Mortgage rates have steadily climbed despite the claim of the administration of President Joe Biden that the economy is improving. (Related: U.S. mortgage rate surges to highest level in over two decades.)
As a result, the median monthly housing payment has surged to a record $2,843, representing a staggering 13 percent jump from the same period last year.
Ben Ayers, a senior economist at insurance firm Nationwide’s market research arm, explained how market conditions affect potential homebuyers.
“Market conditions for homebuyers remain challenging with few homes listed and costs for ownership still climbing,” said Ayers. “Despite strong fundamentals for demand from demographics and a strong labor market, many first-time buyers are being shut out of the market by elevated financing rates and rising prices.”
In an article written by Megan Henney for Fox Business, she cited several factors influencing the affordability crisis gripping the housing sector.
First, years of insufficient housing construction have led to a nationwide shortage of homes. The rapid ascent of mortgage rates and the escalating costs of construction materials exacerbated this situation. Second, the surge in mortgage rates over the past three years has created a “golden handcuff” effect in the housing market. Sellers who locked in historically low mortgage rates of three percent or less during the pandemic have been hesitant to sell. This further constrains the housing supply and limits options for prospective buyers.
Experts then predict that mortgage rates will continue to remain high throughout the first half of 2024, with a potential decline anticipated only when the Federal Reserve initiates rate cuts.
However, Chen Zhao, the economic research lead of Redfin, noted that some prospective homebuyers are motivated to purchase now out of concern that interest rates might increase further, while others have adjusted their housing budgets downwards in response to sustained high rates.
“Home sales are slower than usual, but there are still people buying and selling because if not now, when?” said Connie Durnal, a Redfin Premier agent in Dallas. “I’ve had a few prospective buyers touring homes for the last several years since mortgage rates started going up, and they wish they would have bought last year because prices and rates are even higher now. My advice to them: If you can afford to and you find a house you love, buy now. There’s no guarantee that rates will come down soon.”
Visit HousingBomb.com for more stories on the real estate market.
Watch this episode of “Flyover Conservatives” as host Colton Whited interviews financial expert Kirk Elliot about the exploding mortgage rates in the United States.
This video is from the Flyover Conservatives channel on Brighteon.com.
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