Current:Home > ScamsCost of buying a home in America reaches a new high, Redfin says-LoTradeCoin
Cost of buying a home in America reaches a new high, Redfin says
View Date:2024-12-23 17:00:35
Buying a house is costlier than anytime in at least the last decade, with property buyers hit with the double whammy of rising mortgage rates and home prices, according to real estate company Redfin.
The average interest rate on a fixed 30-year home loan rose to 7.1%, marking the first time this year rates have topped 7%, according to Freddie Mac. Meanwhile, the median asking price for U.S. home — what homeowners hope their property will sell for — jumped to a record $415,925 for the four weeks ended April 21, Redfin said.
The median U.S. home sale price — what buyers actually paid for a property — also hit a record in April, reaching $383,725, Redfin said, with its data going back to 2015. Sale prices combined with current mortgage rates pushed the median mortgage payment to a record $2,843, up nearly 13% from a year ago, it added.
That may also mean the cost of buying a home is at a historic high, although property buyers in the 1980s dealt with mortgage rates that were significantly higher than today's loans. Mortgage rates reached a peak of 18.6% in October 1981, although home prices were considerably lower, even on an inflation-adjusted basis, than today's values.
The elevated costs add to the challenges facing homebuyers amid the spring home-buying season. Real estate activity tends to pick up in the spring, as homeowners traditionally list their properties during the season and buyers venture to open houses amid warmer weather and longer days.
Americans are expected to buy 4.46 million existing homes this year, a 9% increase from 2023. Even so, many would-be buyers have been priced out of the market, economists say.
"[E]levated mortgage rates and high home prices have been keeping some buyers on the sidelines this spring," Bright MLS Chief Economist Lisa Sturtevant said in an email. "First-time homebuyers are having the hardest time."
Buying a home remains a primary wealth-building tool for U.S. households, but rising home prices have placed homeownership increasingly out of reach for the average American. To comfortably afford a typical home, Americans today must have household income of $106,500 — up sharply from $59,000 just four years ago, according to Zillow research.
Home prices have escalated in part because of a lack of available for-sale properties. Construction companies haven't kept pace to meet housing demand, while homeowners have been hesitant to sell because they don't want to give up their mortgages, with some having secured rates below 3% during the pandemic.
The rising cost of homeownership means sellers and buyers should enter today's market with lowered expectations, said Redfin economic research lead Chen Zhao.
"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," Zhao said in the report.
Zhao added, "My advice for serious buyers who can afford today's costs is to shop for your dream home and accept that this year is probably not the time to find a dream deal."
- In:
- Mortgage Rates
- Real Estate
Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.
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