Home prices jump marks ‘highest level on record’

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MIAMI, FL - OCTOBER 13: A bank owned sign is seen in front of a foreclosed home on October 13, 2011 in Miami, Florida. RealtyTrac released a report that indicated that more homes were being foreclosured on in the third quarter of 2011. The report shows that there is evidence that the recent downward trend in foreclosures due to problems that surfaced with the way many lenders were handling foreclosure paperwork, is about to change direction, with foreclosure activity slowly beginning to ramp back up. (Photo by Joe Raedle/Getty Images)

According to a new report by the National Association of Realtors, data shows the median existing U.S. home sale price jumped in June to a 4.1% increase from the same time last year. That marks the highest level on record and is the second straight month that prices topped a new high, reports Fox Business.

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The median existing U.S. home sale price jumped to $426,900, and while prices marched higher, sales of previously owned homes tumbled 5.4% to an annual rate of 3.89 million units.

There was a slight uptick in inventory last month with about 1.32 million homes for sale, according to the report, up 3.1% from the previous month and 23.4% from the same time one year ago.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said Lawrence Yun, NAR chief economist. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”

Homes sold on average in about 22 days last month. That is down from the 24 days recorded in May but marks an increase from the 18 days in June 2023. Before the COVID-19 pandemic, homes typically sat on the market for about a month before being sold.

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At the current pace of sales, it would take roughly 4.1 months to exhaust the inventory of existing homes – the highest level since May 2020. Experts view a pace of six to seven months as a healthy level.

“Even as the median home price reached a new record high, further large accelerations are unlikely,” Yun said. “Supply and demand dynamics are nearing a balanced market condition.”

Fox Business explains:

There are a number of driving forces behind the affordability crisis.

Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.

Higher mortgage rates over the past three years have also created a “golden handcuff” effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.

Economists predict that mortgage rates will remain elevated for most of 2024 and that they will only begin to fall once the Federal Reserve starts cutting rates. Even then, rates are unlikely to return to the lows seen during the pandemic, with investors predicting just one or two rate reductions this year.

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