Real estate company Redfin said the cost of buying a home is higher than at any time in at least a decade, with buyers suffering the double whammy of rising mortgage rates and rising home prices.
The average interest rate on a 30-year fixed home loan rose to 7.1%, the first time rates have risen above 7% this year. According to Freddie Mac. Meanwhile, the median asking price for U.S. homes – what homeowners want to sell their property for – rose to a record $415,925 in the four weeks ended April 21, Redfin said. Explained.
The U.S. median home sales price (how much buyers actually paid for a property) hit an all-time high in April, hitting $383,725, Redfin said, with data going back to 2015. Sales prices combined with current mortgage rates pushed the median mortgage payment to a record $2,843, about 13% higher than a year ago, it added.
It may also mean that the cost of buying a home is at an all-time high, even though homebuyers in the 1980s faced mortgage rates that were much higher than today’s lending rates. In October 1981, mortgage rates peaked at 18.6%, even though home prices (even on an inflation-adjusted basis) were much lower than they are today.
Rising costs add to the challenges facing homebuyers during the spring home buying season Real estate activity picks up in the spring, as homeowners traditionally list their properties for sale in the spring and buyers risk opening their homes as warmer weather and longer days arrive.
Americans are expected to purchase 4.46 million existing homes this year, a 9% increase from 2023. Even so, many potential buyers are being priced out of the market, economists say.
“Higher mortgage rates and home prices this spring have forced some buyers to wait,” Bright MLS chief economist Lisa Sturtevant said in an email. “
The hidden costs of home ownership are rising
03:24
Buying a home remains the primary wealth-building tool for American families, but rising home prices are making owning a home increasingly difficult for the average American. Americans today can afford modest homes to be comfortable. Household income must be $106,500 — According to Zillow, research is a significant jump from $59,000 four years ago.
One of the reasons for rising house prices is the lack of properties for sale. Construction companies have failed to keep up with demand for housing, while homeowners, some of whom have guaranteed rates below 3% during the pandemic, are hesitant to sell because they don’t want to give up their mortgages.
Zhao Chen, director of economic research at Redfin, said rising housing costs mean sellers and buyers should lower expectations entering today’s market.
“Although sellers are currently charging high prices, they should set a competitive price from the start to attract buyers and avoid being forced to sell because high mortgage rates cut into their purchase budget,” Zhao said in the report.
“My advice to serious buyers who can afford to buy your dream home today is to accept that this year may not be the time to find your dream deal,” Zhao added.
Christopher J. Brooks
Christopher J. Brooks is a reporter for CBS MoneyWatch. He has worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His coverage focuses on the US housing market, sports business and bankruptcy.
