Thin Silver Lining Amid Housing Price Increases | Immovable


Homebuyers face the perfect storm in the form of rising mortgage rates combined with another month of record home prices.

In April, median home prices hit an all-time high of $425,000, according to a recent real estate® report. That’s a whopping 14.2% increase over last year.

Meanwhile, soaring mortgage rates averaged 5.1% at the end of April for 30-year fixed-rate loans. And there is still a severe shortage of homes on the market.

Based on the new national median list price and mortgage rates, a monthly mortgage payment for the same home costs almost 50% more in April than it did a year ago.

This means that buyers who closed last April are shelling out $1,260 for their monthly mortgage payments, while today’s buyers would pay $1,820 ($560 more) per month for the same mortgage, on the same house.

“It’s a huge swing for home buyers when they’re also likely to face rising costs for things like gas, groceries and utilities,” said Danielle Hale, chief economist. of real estate “Today’s home buyers will need to focus more on their budget to avoid getting carried away with today’s market.”

In April 2020, there were 60.1% more active registrations than there are currently for this same period. To put that percentage into perspective, for every five houses available for sale in 2020, today there are only two.

But there’s a silver lining to the storm cloud of record house prices and rising rates: Sellers are still listing fewer homes overall than before the pandemic, but the numbers are gradually rising, according to analysis by four of the five weeks ending in April.

While the number of homes for sale fell in 42 of the 50 largest metro areas from 2020, eight metros experienced a growth spurt in home listings.

Although homeowners are increasingly putting up “For Sale” signs, rising home prices and mortgage rates are making buying a home nearly impossible for many buyers on a tight budget. As a result, many give up or put plans to buy a home on hold.

That’s good news for homebuyers who have the financial leeway to keep looking, as they may not have to deal with the heated bidding wars of the past few months. And with housing stock also expected to rise in the coming weeks (compared to last year), buyers may face more choice as well as less competition.

“These trends combined should bring more balance to the housing market, which should help slow the pace of price growth,” Hale said. “If homebuyers can face higher housing costs, they should have more options to choose from in the near future and less competition from other aspiring homebuyers.”

While homebuyers will be able to click on more home listings, there are no signs of a complete cooling in the housing market. As home prices and mortgage rates continue to rise, the length of time a home stays on the market has hit a new low.

“Even in the face of higher real estate costs, certain factors are keeping buyers motivated,” Hale explained. “First, rents continue to rise much more than normal, so many potential first-time buyers are looking to escape not just this year’s increases, but future rent hikes as well.”

Nationally, rents jumped nearly 20% year-over-year to $1,807 per month in March.

Additionally, many buyers expect mortgage rates to continue to rise, giving them a strong incentive to buy sooner rather than later. So overall, shoppers will need to move quickly once they spot a place they like.

“We still have a lot of young buyers looking to become homeowners,” Hale said.

real estate provided this report.

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