Home prices in the U.S. increased by 0.5% in April, the sixth consecutive month of similar increases, and rose 7.3% from a year earlier, according to the Redfin Home Price Index (RHPI). Elevated mortgage rates and high home prices are curbing homebuyer demand, but prices continue to tick up because there aren’t enough homes on the market.
New listings have increased in recent months, but remain roughly 20% below pre-Covid levels. That’s largely because many homeowners don’t want to sell, as they feel “locked in” by the low mortgage rate they scored during the pandemic.
The average 30-year-fixed mortgage rate was 6.99% last month. That’s up from 6.82% in March and 6.34% in April 2023 and is more than double the all-time low of 2.65% during the Covid19.
The median U.S. home sale price-what buyers actually paid for a property-hit a record $433,558 in April, up 6.2% from a year earlier. Median sale prices rose most from a year earlier in Buffalo, NY (24.3%), Anaheim, CA (22.8%) and Rochester (15%). Home sales were little changed from a month earlier (0.2%) in April on a seasonally adjusted basis, but were down 1.4% from a year earlier, Redfin said.
Homebuyers are getting hit by the one-two punch of high prices and elevated mortgage rates but it’s not all bad news for them, according to Redfin Economics Research Lead Chen Zhao. “Mortgage rates are already inching lower in response to April’s inflation report, which signaled that the Fed may cut interest rates this summer—a possibility that just weeks ago many thought was off the table” said the researcher.
The April 2024 Consumer Price Index (CPI) report rose by a softer-than-expected 0.3% month-over-month (MoM) and 3.4% year-over-year (YOY), marking a deceleration from a 3.5% YoY rise in March and the first-time inflation has cooled this year. Similarly, the core CPI (excluding food and energy) also increased by less than expected, up 3.6% YoY in April, decelerating from 3.8% YoY in March.
While the journey back to the Federal Reserve’s 2% target isn’t over just yet, progress is still being made. “Regardless of when the Fed starts cutting rates, for homebuyers, today’s data points us back in the direction of expecting mortgage rates to moderate later this year” Chen Zhao concluded.
To comfortably afford a typical home, Americans today must have household income of $106,500 — up sharply from $59,000 just four years ago, according to Zillow research.
