A new report from Redfin says the median U.S. home-sale price ($383,750) rose 1.5% from a year earlier during the four weeks ending July 9. That is the first increase noted in nearly five months and just $2,500 shy of the record high hit in June 2022.
Home-sale prices increased most in Milwaukee (13.5% YoY), Providence, R.I. (9.2%), Miami (7.8%), Cincinnati (6.7%) and Newark, N.J. (6.7%).
Sale prices declined in 19 metros, with the biggest drops in Austin, Texas (-9% YoY), Detroit (-7.4%), Las Vegas (-6%), Phoenix (-5.5%) and Fort Worth, Texas (-5.3%).
The median asking price of newly listed homes was $393,248, up 1.3% from a year earlier. Asking prices have been increasing for a month.
Average weekly mortgage rates (6.81%) have reached their highest level since November 2022, bringing the typical homebuyer’s monthly payment to a near-record-high of $2,627. That’s up 13% ($305) from a year earlier.
To illustrate the affordability issue: A homebuyer on a $3,000 monthly budget can afford a $450,000 home with today’s average rate. That buyer has lost $30,000 in purchasing power since February, when they could have bought a $480,000 home with that month’s average rate of around 6%.
Despite relatively low demand for homes, prices are rising because so few fare or sale. New listings are down 27% year over year, the biggest drop since the start of the pandemic, and the total number of homes on the market is down 14%, the biggest drop since March 2022. Locked in by low rates, potential sellers are reluctant to move; nearly all homeowners have a rate below 6%.
On a positive note: The latest consumer-price index report shows that inflation cooled more than expected in June, largely because it has begun reflecting months of cooling housing costs.
“This month’s inflation report is likely to bring mortgage rates down a bit from their recent highs. It shows that the Fed’s interest-rate hikes are working and increases the chance they’ll only hike rates one more time this year,” says Redfin economic research lead Chen Zhao. “Because elevated mortgage rates are responsible for both of today’s major homebuying challenges—high monthly payments and low inventory—any decline is welcome news for buyers.”
Image by Asa K from Pixabay.