Single-family home prices soared in the first quarter of 2024, starting the year off with an unaffordable pop.
Prices were up 7.4% from Q1 2022 to Q1 2024, according to Fannie Mae’s latest Home Price Index. Fannie Mae measures the average, quarterly price change for all single-family properties in the United States, excluding condos.
The index also measured a quarterly increase of 1.7%, effectively the same as the growth registered in Q4 2023.
“Home prices continued to rise in the first quarter as the housing market remained seriously supply constrained,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
Duncan noted that stabilizing rates brought some buyers and sellers off the sidelines in January, providing a demand boost that helped keep prices elevated.
“Mortgage rates have trended upward again of late, but there is support for home prices in strong demographic demand from younger generations. We expect home sales to rise modestly this year as potential homebuyers appear to be acclimating to the higher-rate environment and, in some cases, may be less able to put off moving for life reasons,” he said.
About 6.2% of all buyers in 2022 were under the age of 25. While this pales in comparison with Millennials, the largest homebuying cohort, it shows that Zoomers are prepared to enter the housing market despite their young age.
To make it in the market, young Americans area “house hacking” by renting out part of the home for an additional stream of income. This is especially relevant in a market bereft of small starter homes. Using an additional bedroom or basement as a rental can offset the costs.
“Having the option to rent or have a roommate is important in an environment where there just aren’t that many small homes for sale,” Daryl Fairweather, chief economist at Redfin, noted.
More than half of Gen Z buyers expressed interest in this system to combat the high costs of homeownership.
A third of young buyers also expect their families to help cover a down payment on a home.
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