The median sales price of a home in the United States hit $400,894 for the four weeks ending June 7, a record high and up 1.5 percent from a year back, real estate brokerage Redfin said in a June 11 statement.
The jump in sales price is happening even though there are currently more sellers than buyers in the market, with prices being supported by tight supplies, the company said. Chen Zhao, head of Redfin’s economics research, said that prices crossing the $400,000 threshold is an indication of how difficult it is for many Americans to become homeowners.
“There are a few bright spots, though,” Zhao said. “Price growth has lost some steam over the last month, and prices aren’t rising nearly as fast as they were last year. And the high costs of purchasing a home are keeping many buyers out of the market, which has led to a historic buyer’s market in most of the country.”
“So even though prices are high, in many markets—especially places like Nashville and Austin, which were once red hot—the door is open for buyers to negotiate with sellers, ask for concessions and get the terms they want.”
The weekly average rate for a 30-year fixed-rate mortgage was 6.52 percent for the week ending June 10, up from 6.48 percent a week back, according to data from Freddie Mac.
While the current rate is down from last year’s annual peak of 7.04 percent, it is still up from the recent low of 5.98 percent hit in late February.
High home prices combined with elevated mortgage rates have pushed up monthly mortgage payments, Redfin said.
The median monthly payment for the four weeks ending June 7 was $2,619, only $8 lower than the 11-month high hit in May.
In addition to high housing costs, concerns about inflation, war in the Middle East, and the possibility of the Federal Reserve raising its benchmark interest rates are also contributing to dampened buyer demand, according to the brokerage.
In a June 10 statement, real estate marketplace Zillow attributed the recent jump in mortgage rates to a stronger-than-expected jobs report and a high inflation reading.
“Mortgage rates and the typical monthly payment are still lower than a year ago, and the share of listings affordable to a median-income household remains above last year’s—but the higher rates climb, the faster those affordability gains evaporate,” Zillow said.
High Regulatory Costs
A significant factor for higher new home prices is regulatory costs, the National Association of Home Builders (NAHB) said in a June 9 statement.A study conducted by the group found that local, state, and federal regulations combined make up $131,734 of the cost of a new single-family home. This is 26.4 percent of January’s average home sales price.
“This study illustrates how excessive regulation is deepening the nation’s housing affordability crisis and making it harder for builders to deliver the affordable, attainable housing that our nation sorely needs,” said NAHB Chairman Bill Owens.
“Policymakers should remove unnecessary and costly regulations that are pricing buyers out of the market and slowing construction of new homes and apartments.”
The Trump administration has taken action to tackle the issue of high regulatory costs in the housing market.
On May 20, HUD announced regulatory best practices to “unleash” building activity and boost homeownership.
Specifically, HUD released a State and Local Best Practices for Home Construction Report, detailing a series of regulatory actions that local and state governments can take to ease barriers to home construction.
These best practices aim not only to cut construction costs but also to speed up construction timelines and unlock land for new housing supply.