Homebuying Costs Hit Another Record High

The cost of buying a home hit another record high as rising rates intersected with home price growth.

The median U.S. home sale price increased 5% YOY to $380,250 during the four weeks ending April 14. This is just a few grand below June 2022’s all-time high.

At the same time, mortgage rates have jumped up over 7% in recent weeks as inflation data forced the Central Bank to walk back its talk of rate cuts. Some analysts who previously predicted three cuts from the Fed in 2024 now say there may be none at all.

“I think we’re still expecting a couple but clearly we continue to kick the can down the road on rate cuts, and it wouldn’t surprise me at all if we don’t see any this year,” Wells Fargo Investment Institute’s Brian Rehling told Bloomberg.

Buyers faced 7.5% rates this week, the highest of 2024. But the spring season is still on — mortgage applications increased last week, and Redfin’s Homebuyer Demand Index soared to its highest level in nearly seven months.

“Home sales are slower than usual, but there are still people buying and selling because if not now, when?” said Connie Durnal, a Redfin agent in Dallas. 

“I’ve had a few prospective buyers touring homes for the last several years, since mortgage rates started going up, and they wish they would have bought last year because prices and rates are even higher now. My advice to them: If you can afford to and you find a house you love, buy now. There’s no guarantee that rates will come down soon.”

Home prices are expected to continue climbing through the year as inventory remains constrained. Construction saw an early pop after winter weather caused delays a the beginning of the year, pushing project timelines together. But last month, with no weather influence, starts and permits tanked for both single- and multi-family projects showing that builders appear to be moving cautiously.

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