US Home Prices Hit a Record High as the American Dream Becomes Unobtainable

Home prices have continued to climb to record highs across the country, but how is that reflected in home sales and mortgage rates?

Record High House Prices

Image Credit: Shutterstock / Andrey_Popov

Home prices in the US hit a record high last month, with existing homes selling for a median price of $419,300, according to the National Association of Realtors. 

Biggest Jump Since 2022

Image Credit: Shutterstock / jd8

That number signals a 5.8% increase from the same time last year, which is the largest jump in prices seen since October 2022. It is now the highest-ever median house price on the NAR record.

Across the Country

Image Credit: Shutterstock / Deemerwha studio

Sales rates have also been inconsistent across regions, with some regions experiencing notably steeper drops than others. For example, southern states saw sales fall by 1.6% across the board, with the Midwest, West, and Northeast seeing the most notable changes.

How Are Buyers Responding?

Image Credit: Shutterstock / DifferR

Home prices may be racing ahead, with May being the eleventh consecutive month that prices have increased, but how are buyers responding? Are sales keeping up with the increase in price?

Falling for the Third Month

Image Credit: Shutterstock / goodluz

Sales have not kept up with price jumps, with nationwide home sales falling by 0.7% in May. While it may seem like a fractional change, it is the third month in a row where home sales have fallen based on NAR statistics.

Seasonally Adjusted Annual Rate

Image Credit: Shutterstock / Sutthiphong Chandaeng

This brings the seasonally adjusted annual rate of home sales to 4.11 million. This is slightly up on polling done by Reuters, which saw economists predict a rate of 4.10 million units.

Resold Homes Fall Further

Image Credit: Shutterstock / silverkblackstock

In particular, resales for pre-existing homes (which make up a significant portion of nationwide house sales) fell by 2.8%.

Edged Out of the Market?

Image Credit: Shutterstock / SFIO CRACHO

Industry experts and analysts have pointed out that the two statistics correlate, as many home buyers – in particular, first-home buyers – are being edged out of the market by extraordinary prices.

“Creating a Wider Divide”

Image Credit: Shutterstock / Prostock-studio

“Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” said Lawrence Yun, chief economist for the NAR.

Unlikely to End Soon

Image Credit: Shutterstock / MUNGKHOOD STUDIO

The property market had predicted an uptick in house sales in spring. Now, it seems increasingly unlikely that the downward trend, which began in 2022, will end this year.

“Sales Refuse to Recover”

Image Credit: Shutterstock / Pickadook

“Home sales refuse to recover,” said Yun. “I thought we would see a recovery this spring. We are not seeing it.”

Mortgage Rates Soar

Image Credit: Shutterstock / Deemerwha studio

Mortgage rates have also jumped in the same period, according to the NAR, which has left even more potential homebuyers in the lurch. 

7% Through 2024

Image Credit: Shutterstock / fizkes

The average rate for a 30-year mortgage in the US has remained around 7% throughout the year.

Double in 5 Years

Image Credit: Pexels / Andrea Piacquadio

Data shows that mortgage payments are now almost double what they were in 2019 due to higher property prices and accelerated interest rates.

House Prices Also Doubled

Image Credit: Shutterstock / wutzkohphoto

This change in mortgage rates should be no surprise, as median home prices have also jumped by 50% in the same period.

Shift in Affordability

Image Credit: Shutterstock / Motortion Films

Due to rising prices and interest rates, the shift in housing affordability for average Americans during this period has been undeniable. 

Enormous Down Payments Needed

Image Credit: Shutterstock / Ground Picture

According to research from the real estate marketplace company Zillow, a median-income household now needs to save up a $127,000 down payment to afford the average monthly mortgage payment. The problem? This is approximately twice as much as the median US salary.

First-Home Buyers Still See the Value

Image Credit: Shutterstock / – Yuri A

Yun argues that even as home prices soar beyond what the average household can afford, first-home buyers will still sacrifice to attain the investment. “First-time buyers in the market understand the long-term benefits of owning,” he said.

Looking to the Fed

Image Credit: Shutterstock / Pickadook

The property market and potential buyers and sellers are now looking to the Federal Reserve for an ounce of reprieve, as it is expected to continue cutting down interest rates, which previously hit a 23-year high.

Only One Cut This Year

Image Credit: Shutterstock / PanuShot

While the Fed predicted three rate cuts for 2024, an announcement last week that inflation had continued to fall means the Fed is likely to reduce interest rates just once for the remainder of the year.

Remote No More: 19 Companies Returning to the Office

Image Credit: Shutterstock / Monkey Business Images

As the pandemic wanes, companies are recalling remote workers back to the office, sparking debates on fairness, costs, and convenience. However, there are also notable productivity, coworking, and mental health benefits to consider. Feeling the effects of these changes? Remote No More: 19 Companies Returning to the Office

8 Costco Must Buys and 8 to Leave Behind

Image Credit: Pexels / Gustavo Fring

Ever wandered Costco’s aisles, questioning if that giant jar of pickles is a real bargain? Or debated buying tires where you get your rotisserie chicken? Welcome to the definitive guide to Costco shopping—a journey to save money, prevent regrets, and offer quirky insights into bulk buying. 8 Costco Must Buys and 8 to Leave Behind

23 Reasons Texas Is the Next Big Thing

Image Credit: Shutterstock / Sean Pavone

Texas is becoming a beacon of opportunity, blending cultural heritage with economic growth. From its landscapes to its industries, the Lone Star State offers a dynamic lifestyle. Here are 23 reasons why Texas stands out, attracting entrepreneurs, artists, tech professionals, and families seeking new beginnings. 23 Reasons Texas Is the Next Big Thing

The post US Home Prices Hit a Record High as the American Dream Becomes Unobtainable first appeared on Liberty & Wealth.

Featured Image Credit: Shutterstock / karamysh.

The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

Leave a Comment