Home Prices Are Still Rising, But Buyers Aren’t Slowing
Median home prices rose to a new all-time high of $425,000 in April, an increase of 14.2% year-over-year, but despite waning affordability coupled with low existing supply, homes are still selling faster than ever, Realtor.com reports. Rising interest rates are pushing monthly payments up to 50% higher for the same homes compared to just one year ago. To make matters worse, the number of active listings is down a staggering 60.1% from April 2020, but buyers are still finding a small silver lining beneath a burgeoning housing crisis.
A lack of affordability is causing some buyers to drop out of a heated race for home purchases, alleviating competition for those brave enough to stick around. Eventually, an overheated market will also lead to price deceleration, meaning that buyers who persevere through the current affordability crisis will be rewarded by more housing availability and less price volatility in the months to come.
Though homeowners are putting up more “For Sale” signs, the one-two punch of higher home prices and mortgage rates makes purchasing a home nearly impossible for many buyers on a tight budget. As a result, many are dropping out or putting their homebuying plans on hold.
That’s good news for home shoppers who have the financial leeway to keep looking, since they might not have to contend with the heated bidding wars of the past few months. And with housing stock also projected to grow in the coming weeks (compared with last year), buyers might face more choices as well as less competition.