New real estate data reveals that the average cost of buying a house in the United States has hit a record high, underscoring the financial struggles that most Americans are facing in the current economy.
According to The Hill, the report from the real estate company Redfin shows that the median home price is now $383,725, as of April 21st. This represents a 5.2% increase from last year, and one of the largest increases in home prices since October of 2022.
Meanwhile, the average 30-year fixed mortgage rate is now 7.1% as of this week, which is the highest level it has been since November of 2023. At the same time, the median monthly housing payment rose to $2,843, a record 13% increase from the same time last year.
Chen Zhao, the head of economic research at Redfin, said that the report confirms that potential buyers should simply “accept that this year is probably not the time to find a dream deal.”
“Price growth may cool slightly in the coming months if mortgage rates stay high or rates might fall slightly — but overall housing costs are likely to remain elevated for the foreseeable future,” Zhao explained.
Homebuyers and others in the real estate market are keeping an eye on the actions of the Federal Reserve, which has hinted at the possibility of cutting interest rates. However, most do not expect the rate cuts to begin until September, which would keep borrowing costs, including mortgage rates, at an all-time high for the next several months.
While inflation declined to 3.5% year-over-year in March, it has remained stubbornly high, well above the Fed’s goal of 2%. Interest rates have been maintained at a range of between 5.25% and 5.5% in an effort to restrict economic growth, in the hopes that inflation will go down with the rest of the economy.
In response to the high mortgage rates, many buyers are turning to cash purchases of homes, thus leading to a near-record high in the rate of cash purchases. In the month of February, more than one-third of homes were purchased with cash, while the median down payment soared to about $55,620, a 24.1% increase from the previous year.
“My advice to sellers is to price your home fairly,” Zhao continued. “Even though sellers are getting top dollar at the moment, they should price competitively to attract buyers from the start and avoid having to drop their price as stubbornly high mortgage rates eat into buying budgets.”