Existing Home Prices Hit Record $402,000—But Sales Fall As Housing Market 'Painfully' Adjusts To Rising Rates
ForbesDec 30, 2021
US Housing Market: Average Price Hits Record $407k as Sales Slump
Image copyright: AFP/Getty Images [via The Guardian]
The Facts
The median sale price for an existing (previously occupied) home in the US rose to $407,600 in May - an all-time high that is nearly 15% over last year's figure - according to the National Association of Realtors.
At the same time, however, existing home sales fell 3.4% from April - a decline of 8.6% from May 2021 - marking a two-year low in the otherwise hot sector.
The Spin
Narrative A
Home sales have now returned to the more sustainable - and rational - levels of 2019, before the pandemic-induced spending spree set in. This is good news: although high mortgage rates will be a challenge for some buyers, they will also slacken demand and help to bring prices back to reality.
Narrative B
Higher mortgage rates may be necessary to cool off inflationary pressures, but they're making homes even more unaffordable for the vast majority of Americans. Homes that were affordable for middle-class Americans with a monthly budget of $2,500 are now well out of reach given the recent rate hikes and their impact on mortgage rates.