ResiClub co-founder and editor-in-chief Lance Lambert talks about the US housing affordability crisis on “Making Money.”
The cost of buying a new home has reached a new record, despite mortgage rates falling to their lowest in three months, according to a new report.
Investigation result Redfin In the four weeks ending June 9, the median U.S. home sales price soared to $394,000, up 4.4% from a year ago.
The monthly mortgage payment at that price, taking into account the average interest rate for a 30-year mortgage of 6.99%, would currently be $2,829, about $30 less than recorded in April.
Housing costs are unlikely to rise much further due to the recent decline in home prices. Mortgage interest rates, Interest rates fell after the government reported in May that inflation had slowed, but they may not fall much further.
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A “Home For Sale” sign in front of a home in Huntington Beach. (Allen J. Schaven/Los Angeles Times via Getty Images/Getty Images)
“The latest inflation report is good for homebuyers because mortgage rates are already declining, and the Fed meeting this week is likely to moderate the decline in mortgage rates,” said Chen Chao, head of economic research at Redfin. “But on the flip side, if lower mortgage rates lead to a recovery in demand over supply, it could negate the slowdown in home price growth and lead to further price increases.”
There are a variety of driving forces behind the rise in house prices.
Years of under-construction created a nationwide housing shortage, then soaring mortgage rates and rising costs of construction materials made the problem worse.
Rising mortgage rates over the past three years are also creating a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of 3% or less at the start of the pandemic are becoming reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
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Economists predict mortgage rates will remain high for most of 2024, then Federal Reserve Still, interest rates are unlikely to return to the lows seen during the pandemic, and investors expect only one or two rate cuts this year.
A sign outside a home for sale in Atlanta on Sept. 6, 2023. (Photographer: Elijah Nouvérage/Bloomberg via Getty Images/Getty Images)
Mortgage buyer Freddie Mac said Thursday that the average interest rate on a 30-year loan fell slightly this week to 6.95%, down from a fall peak of 7.79% but still significantly higher than the pandemic-era low of just 3%.
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The supply of homes available for sale remains an astonishing 34.3% down from normal levels before the COVID-19 pandemic began in early 2020, according to a separate report from Realtor.com.
A majority of homeowners say they would be nearly twice as willing to sell their home if their mortgage interest rate was 5 percent or higher, according to a Zillow survey. Currently, about 80 percent of mortgage holders have interest rates below 5 percent.
