Home prices continue to rise, with some buyers seeing their home prices double, according to the National Association of Realtors. (iStock)
Home prices increased in 86% of metropolitan areas nationwide, and the median price of single-family existing homes nationwide rose 3.5% year over year to $391,700.
For buyers currently on the market, this means home prices have doubled. Compared to a year ago, the national median price for single-family existing homes rose 3.5% to $391,700. Last quarter, national median prices rose 2.2% year over year.
The rise in prices is one reason Americans continue to struggle to make ends meet even as inflation eases, said NAR Chief Economist Lawrence Yun. U.S. inflation rose 3.4% in December, up from a 3.1% rise the previous month, but has slowed since hitting a 40-year high after the pandemic. However, the BLS can lag home price increases because it uses changes in rental values, known as owner-equivalent rents (OER), to measure housing costs for homeowners.
“Homeowners have benefited from the accumulation of home equity. However, many homebuyers have been shocked by the high cost of housing, with the typical monthly mortgage payment lower than three years ago. It has risen from $1,000 to more than $2,000 last year,” Yun said. “This doubling of housing costs for recent homebuyers is not included in official consumer price index inflation calculations, contributing to dissatisfaction with the economy.”
Homebuyers can find the best mortgage rates by researching and comparing options. Visit online marketplaces like Credible to compare interest rates, choose loan terms, and get pre-approved from multiple lenders at once.
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Home prices in the South rose the most sharply in the fourth quarter, at 45%, and were up 3.2% year-on-year. Prices rose 7.3% in the Northeast, 4.7% in the Midwest and 4.2% in the West.
According to the report, homebuyers paid the most for their homes in California. Topping the list as the most expensive markets was California’s San Jose, Sunnyvale and Santa Clara metropolitan areas, where the median home price was $1,750,300, an increase of 11%. Anaheim, Santa Ana and Irvine, Calif. were the second most expensive cities, with a median home price of $1,299,500, an increase of 14.8%.
Yun said one of the reasons home prices continue to rise across the country is a lack of inventory.
“Sales were suppressed because inventory was limited,” Yun said. “However, increased home construction and lower mortgage rates will not only improve housing affordability, but will also help bring more homes to market in 2024.”
Even if you’re looking to become a homeowner, shopping around can help you find the best mortgage rates. Visit Credible to compare options without affecting your credit score.
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The report said easing mortgage rates helped improve housing affordability in the fourth quarter. Mortgage rates have fallen more than 1 percentage point since late October, and Fannie Mae predicts rates could reach 6% if the Federal Reserve cuts rates this year.
According to NAR, home prices improved by 1.2% in the fourth quarter compared to the previous quarter. A consumer with a 20% down payment paid approximately $2,163 in monthly mortgage payments, compared to his $2,189. This figure is 10% ($196) higher than what consumers paid for her a year ago.
The Fed expects to cut interest rates several times this year, but has not yet set a timeline for how quickly or to what extent. Fed officials expect at least three rate cuts this year, with the central bank saying rates are expected to fall to 4.6%. Latest economic forecasts In its Summary of Economic Projections (SEP) it said:
Fannie Mae expects mortgage rates to fall below 6% by the end of 2024, based on the Fed’s move to cut interest rates sooner than expected. How quickly rates will be cut will depend on how quickly inflation approaches its 2% target rate or whether the Fed senses the U.S. economy is headed toward a recession.
Even if you’re looking to become a homeowner, shopping around can help you find the best mortgage rates. Visit Credible to compare options without affecting your credit score.
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