A recent report in the Wall Street Journal that cited data from the National Association of Realtors and Fannie Mae caught our eye by highlighting an unfortunate reality of low interest rates: while they initially help even the playing field and make homes more affordable for more Americans, after a while, price appreciation will ultimately make housing less accessible for middle- and working-class Americans.
Using data combined with anecdotes from home buyers, WSJ illustrated how the rapid pace of price appreciation over the last year is affecting the outlook for the housing market, as high prices negate the impact of mortgage rates that are still near record lows.
Nationwide, the median existing-home sales price rose 16.2% in the first quarter to $319,200, a record high in data going back to 1989, NAR said.
Prices are rising so rapidly that they are outweighing the benefit of rock-bottom borrowing rates. In the first quarter, the typical monthly mortgage payment rose to $1,067, from $995 a year earlier, NAR said, even as mortgage rates declined.
Of course, the frenzied state of the American real estate market is nothing new.
The other day, we reported that home sales prices in the country’s hottest markets had risen by their widest level since 2006, according to the Case-Shiller Home Price Index, a closely watched measure of home prices in the US which offers a breakdown by region, as well as nationally. According to Case-Shiller, US home prices in 20 major cities are up a shocking 11.10% year-over-year.
But outside the major metro markets, demand was even stronger, translating into the biggest YoY increase in median sales since 2006.
As for that data we noted earlier, the NAR found that 182 of the 183 regions it tracks are reporting higher median sales prices than the year prior. But even more notably, 89% of those areas are seeing prices up more than 10%.- READ MORE
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