The costs of buying a home has hit an all-time high: report

Buying a home in the United States has never been more expensive, according to one expert. new report From real estate company Redfin.

In the four weeks ending April 21, the median home price hit a record high of $383,725. That’s a 5.2% year-over-year increase and one of the largest increases in home prices since October 2022, Redfin found.

This week, the average interest rate on a 30-year fixed mortgage hit 7.1%, the highest level since November 2023. Mortgage rates briefly fell at the end of last year after the Federal Reserve signaled rate cuts this year, but have been rising each year. Strong economic data led to an extension of the schedule for the first rate cut.

The median monthly housing payment also hit a record high of $2,843, an increase of 13% from the same period last year.

Potential buyers should “accept that this is probably not the time to find dream deals this year,” said Chen Zhao, head of economic research at Redfin.

“If mortgage rates remain high or have the potential for interest rates to fall slightly, price growth could slow slightly in the coming months, but overall housing costs could remain high for some time. “It’s highly sexual,” Zhao said.

The Fed is not expected to start cutting interest rates until September, the paper said. CME Fedwatch Toolsmeaning borrowing costs, including mortgage rates, are likely to continue rising for some time.

Shelter costs are one of the stubbornly inflationary indicators, accounting for more than 60% of annual “core” inflation, according to the latest Consumer Price Index (CPI). Inflation fell to 3.5% year-on-year in March from a peak of 9% in June 2022, but the central bank is not convinced it is on track to reach its 2% target and is expected to remain within its current range. It will be 5.25-5.5% at next week’s meeting.

A recent Redfin report found that the rate of all-cash home purchases to avoid high prices and borrowing costs is near an all-time high. More than one in three homes were purchased with cash in February, and the median down payment jumped to $55,640, an increase of 24.1% from a year ago.

But most buyers can’t afford to make an all-cash offer or make a large down payment, creating a reality in which “in many areas only wealthy Americans can afford to buy a home.” ” Zhao previously said.

A lack of housing supply is also a contributing factor to soaring housing prices. Redfin recently reported that a near record number of apartments are being built, which will ultimately lead to a fall in home prices, but demand remains high even with fewer housing units.

“My advice to sellers is to price your home fairly. Even if the seller is getting top dollar at the moment, try to price competitively to attract buyers from the beginning “We need to avoid the need to lower prices as persistently high mortgage rates put pressure on purchasing budgets,” Zhao said.