From Newsweek:
Housing Market Update: Home Prices Reach Troubling Milestone
Insufficient supply of homes in the market is pushing up prices, Wells Fargo economists said, making it tougher for Americans to afford a home amid elevated mortgage rates.
The median sale price of an existing home rose by more than 5 percent in January, according to the National Association of Realtors, even as sales rebounded from their previous months’ doldrums to jump by more than 3 percent. But the housing market still faces a supply crunch. Properties available for sale at current prices equate to about three months of supply, lower than last month and even lower than in November.
The sale price for a home came in at a little over $379,000 on the back of limited supply in January, a record high.
“[It marked] the highest sales price ever for the month of January and the seventh consecutive month of year-over-year price gains,” Wells Fargo economists pointed out.
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Nearly 90 percent of homes in America have rates below 6 percent, according to real estate platform Redfin, which means sellers are reluctant to relinquish the cheaper home loans and enter a market where a 30-year fixed rate for a home is above 7 percent.
“With homebuyers taking advantage of lower mortgage rates, low levels of inventory have kept upward pressure on prices,” according to Wells Fargo. “The combination of relatively higher mortgage rates and higher home prices will continue to make housing less affordable to many potential homebuyers.”
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Experts expect the market to improve when the rates come down.
“We expect rates to resume their decline later in the year as the Federal Reserve’s rate cuts draw closer,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said on Thursday in a note shared with Newsweek.