Home prices surge amidst falling sales: A tough market for first-time … – WEYI

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Existing home prices rose in October compared to last year, even while sales continued to fall. The National Association of Realtors said Tuesday that the median existing-home sales price climbed 3.4% from one year ago to $391,800.

It was the fourth consecutive month of year-over-year price increases.


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And the typical home cost Americans 45% more last month than it did four years ago. The median price in the October before the pandemic was $271,100.

Home values may be up considerably, but so are mortgage rates. And people with locked-in lower mortgage rates aren’t selling as often, constraining inventory and sales volume.

NAR Chief Economist Lawrence Yun said sales volume is the lowest it’s been since the foreclosure crisis in 2010.

Sales volume fell 4.1% from September and 14.6% from one year ago.

Yun expects full-year sales volume to be down 18% from 2022, bringing the two-year decline to about 35%.

“Not only are the buyers getting hit on the affordability challenges, but (for) people who are able to surpass that affordability hurdle, there are simply not enough homes around,” Yun said.

A starter home in 2019 cost families about $1,000 a month, he said.

Today, a starter home costs over $2,000 a month.

Total housing inventory ticked up from September but was down nearly 6% from a year ago.

Tuesday’s report showed sales down everywhere but the Midwest.

And home prices increased in every region.

The median price in the Northeast was $439,200, up 7.5% from the previous year. The median price in the Midwest was $285,100, up 4.2% from last October. The median price in the South was $357,700, up 3.5%. The median price in the West was $602,200, up 2.3%.

NAR recently released its flagship report, its Profile of Home Buyers and Sellers, and found that the median household income for home buyers shot up roughly $20,000 this year.

That showed just how much lower-income families are being priced out of the market.

The median household income for home buyers jumped to $107,000 from $88,000.

The difference in income for first-time buyers was even more dramatic: nearly $25,000 above last year.

First-time buyers made up 28% of the market last month – well below the 38% annual average since 1981.

The typical age of first-time buyers (35) is near a record high. And the typical down payment for first-time buyers is now the highest since 1997, according to NAR.

Yun expects the market to start to normalize in the coming year as the Federal Reserve presumably lays off any additional interest rate hikes.

He said mortgage rates, currently close to 7.5%, should ease to around 6.5% by the busy spring and summer season.

Home prices will be “roughly stable,” he said.

But he expects sales growth of about 15% in 2024.

“The mortgage rates will still deter some buyers, but at the same time, we think that there will be steadily increased supply,” Yun said. “There are so many homeowners who have delayed the move.”

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