Overall home prices soared 20.4% in the 12 months through April, according to the S&P CoreLogic Case-Shiller Index.
As you’re undoubtedly aware, housing costs have soared during the pandemic.
The median existing-home sale-price hit $407,600 in May, up a hefty 14.8% from May 2021, according to the National Association of Realtors. This marks 123 consecutive months of year-over-year increases, the longest streak in NAR records.
Overall home prices soared 20.4% in the 12 months through April, according to the S&P CoreLogic Case-Shiller Index.
“We continue to observe very broad strength in the housing market, as all 20 cities [in a more narrow Case-Shiller index] notched double-digit price increases,” Craig Lazzara, managing director at S&P DJI, said in a statement.
Mortgage rates are soaring too. The 30-year fixed-mortgage rate averaged 5.81% as of June 23, hitting a near-14-year-high, according to Freddie Mac. The rate rose from 5.78% June 16. It totaled just 3.02% a year ago.
Unaffordable Homes
Put together the price and mortgage rate increases, and buying a home has become simply unaffordable for many Americans.
The national median mortgage payment totaled $1,897 in May, up a whopping $513, or 37%, from the beginning of the year, according to the Mortgage Bankers Association.
This lack of affordability is sending many would-be home buyers to rentals. A total of 74% of single-family home landlords said in May that they expect continued strong leasing activity over the next six months, according to a survey from John Burns Real Estate Consulting, cited by The Wall Street Journal.
Of course, the strong demand for rentals is making many of them unaffordable too. Single-family home rents surged a record 14% in the 12 months through April, according to CoreLogic. That’s the 13th straight month of all-time highs.
Accept Housing Inflation
For most of us, all this means we have no choice but to pay more for our housing, unless you already own a home and are content to stay there.
In other recent housing news, pending home sales crawled 0.7% higher in May from April, after six straight monthly declines. But sales dropped 13.6% from May 2021, according to the National Association of Realtors.
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR Chief Economist Lawrence Yun said in a statement. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”
Mortgage rates have climbed as the Federal Reserve has boosted its federal funds rate target 150 basis points since March.
“Trying to balance the housing market by choking off demand via higher mortgage rates is damaging to consumers and the economy,” Yun added. “The better way to balance the market is through increased supply, which also helps the broader economy.”
