Homes in America are the most expensive they’ve ever been, according to one measure.
The median price of a previously owned US home climbed for the eleventh consecutive month in May, up 5.8% from a year ago, to $419,300, the National Association of Realtors said Friday. That’s the highest price ever recorded by NAR.
“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” NAR’s chief economist Lawrence Yun said in a release. “Still, first-time buyers in the market understand the long-term benefits of owning.”
Housing affordability remains in the gutter: In addition to sky-high home prices, mortgage rates are still higher than anything seen in the decade before 2022. And there still are not enough homes in the market to keep up with demand, despite some improvements in recent months.
The situation could improve some later this year, whenever the Federal Reserve begins to pare back interest rates from a 23-year high, thus lowering mortgage rates. But Fed officials have penciled in only one rate cut for this year and the days of ultra-low interest rates are long gone. Economists don’t expect the average mortgage rate to fall below 6% in 2024.
Recent research from Zillow shows that in order for a median-income household to afford a monthly mortgage payment on the typical US home, it would need to save up more than $127,000 for a down payment. That’s roughly double the median salary of a US worker.
Potential home buyers are indeed facing a tough market, but that doesn’t seem to be deterring some: Sales of previously owned homes in the US are up from the decades lows in the fall and only edged lower by 0.7% in May to a seasonally adjusted annual rate of 4.11 million.
This story is developing and will be updated.
