In the hottest housing market in 15 years, U.S. home prices soared to a median price of $375,000 in March.
The combined effect of interest rates hitting an ultralow in 2020, limited housing supply, and an increase in home purchases during the COVID-19 lockdowns, home prices hit a record high across the country, according to the Wall Street Journal (WSJ).
The buying fever has begun to return to normal, as the volume of home sales has dropped to pre-pandemic levels, chief economist for the National Association of Realtors (NAR) Lawrence Yun said, according to the WSJ.
U.S. home prices hit a record of $375,300 in March and analysts expect prices to climb even more, despite higher mortgage rates pushing some buyers out of the market #WSJWhatsNow https://t.co/z1W1SMwBi3 pic.twitter.com/0vSfIRlZKQ
— The Wall Street Journal (@WSJ) April 21, 2022
Mortgage rates are up to 5%, their highest level since 2011, according to Reuters. Yun said he expects the high rate to drive home sales in 2022 down by 10% compared to last year, the WSJ reported.
Mortgage applications for home purchases dropped 3% in mid-April and dropped 14% from a year ago, according to CNBC. (RELATED: REPORT: Amid Tax Troubles, Hunter Biden Is Living In A Malibu Mansion With Secret Service Protection)
“We do see a lot of serious, pre-approved buyers that were ready to go just a month ago, and now they’re not in the market anymore,” said Monika Prasai, a San Diego real estate agent, according to the WSJ.
Spring is usually the busiest season for home sales. Forty percent of existing-home purchases occur between March and June, the NAR said, the WSJ reported.
“The number of people who are in the market has been reduced, but so has the number of homes on the market,” corporate economist for Navy Federal Credit Union Robert Frick said, according to the outlet. “If mortgage rates rise much further, I think they will start becoming a factor, but I don’t think they’re a factor yet.”
At the end of March, property listings for home sales of $950,000 were down 9.5% from 2021, the NAR said, according to the WSJ.
“In this market you know that there’s tons of offers,” Monique Nethercott, a recent home buyer of Springfield, Illinois, said, according to the WSJ. “You just have to accept the fact that you’re going to pay more than what it’s listed for.”
Although building activity has ramped up because of high demand, it has been slowed by supply-chain issues and labor shortages, the outlet noted.