The Median Home Sale Price Just Hit a New Record High. Can You Guess How High it Is?
- Home prices rose during the month of June, following a similar pattern to previous months.
- Home prices are now up 13.4% from a year ago at a time when mortgage rates are on the rise.
Will the number shock you?
For roughly the past two years, home buyers have seen home prices rise steadily. And that's made purchasing a home a challenge.
From mid-2020 through the start of 2022, the silver lining was that mortgage rates were sitting at very competitive levels, which helped to offset higher home prices. But now, buyers are facing the double whammy of sky-high home prices and costlier mortgages. And it's apt to drive some buyers out of the market.
Now, a big reason why home prices have soared so much is that housing inventory has lacked in a serious way. And since buyers have been desperate for homes due to that lack of inventory, it's given sellers the opportunity to command higher prices.
In June, housing inventory rose 9.6% compared to May, according to the National Association of Realtors (NAR). But despite that increase, home prices rose as well. In fact, the median home sale price reached a new record high last month, at a time when buyers were clearly hoping to see prices start to drop.
A very large number indeed
June's median home sale price reached $416,000, per the NAR. That's a 13.4% increase from one year prior and a new record high.
What's surprising is that the median home sale price increased at a time when actual sales dipped. Sales of existing homes declined for the fifth month in a row in June, though, to be fair, existing home sales aren't just a matter of buyer demand, but also a matter of inventory. And since inventory has been low, it's easy to see why home sales have been recorded at a slower pace.
When will home buyers get relief?
For home prices to drop to a more affordable level across the board, we'll need to see a serious uptick in housing inventory. And while listings have been on the rise in recent months, they still need to pick up to make a big difference in home prices.
The NAR reports that as of the end of June, there was a three-month supply of homes on the market. But it generally takes a minimum of a four-month supply to create a market where there's enough housing supply to reasonably meet buyer demand. Until we get to that level, sellers might continue to have the upper hand when it comes to pricing homes.
Of course, that doesn't mean buyers have to pay today's sky-high prices. As housing inventory increases, buyers are apt to get more negotiating power.
Furthermore, some financial experts are already sounding warnings about an upcoming recession. Sellers who take those warnings seriously might choose to list their homes soon to get ahead of that situation. That could lead to a nice uptick in inventory later this year and the kind of cooling of the market that buyers have been desperate for.
This isn't to say that home prices are about to plunge. But could home prices come down by the end of the year? That's certainly a possibility. And if that happens, it could spell relief for buyers across the board.
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