Home prices have risen in 86% of the metro areas nationwide, bumping the national median single-family existing home value up 3.5% from a year ago to $391,700.
For buyers in the market currently, it means home prices have doubled. Compared to one year ago, the national median single-family existing-home price grew 3.5% to $391,700. In the prior quarter, the year-over-year national median price increased 2.2%.
This price increase is one reason why Americans continue to struggle to make ends meet despite moderating inflation, according to NAR Chief Economist Lawrence Yun. U.S. inflation rose 3.4% in December, up from 3.1% growth the previous month, but has moderated since hitting a record 40-year high after the pandemic. However, the BLS uses changes in the rental value – known as Owners’ Equivalent Rent (OER)– to measure the cost of shelter for homeowners so it can lag home price growth.
“Homeowners have benefited from housing wealth accumulation. However, many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” Yun said. “This doubling in housing costs for recent home buyers is not included in the official consumer price index inflation calculations and contributes to this sense of dissatisfaction about the economy.”
Homebuyers can find the best mortgage rates by shopping around and comparing options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF
Homebuyers are paying the most in this area of the U.S.
Home prices in the South saw the most significant jump at 45% in the fourth quarter, with a year-over-year price appreciation of 3.2%. Prices increased 7.3% in the Northeast, 4.7% in the Midwest and 4.2% in the West.
Homebuyers paid the most to buy in California, according to the report. Topping the list as the most expensive markets were San Jose, Sunnyvale and Santa Clara, Calif. Metro areas, where the median home price came in at $1,750,300, an 11% increase. Anaheim, Santa Ana and Irvine, Calif., were the second most expensive, with a median home price of $1,299,500, an increase of 14.8%.
Yun said the lack of inventory is one reason home prices have risen continuously nationwide.
“Sales were restrained due to limited inventory,” Yun said. “But increased homebuilding, along with lower mortgage rates, will not only improve housing affordability but also help bring more homes onto the market in 2024.”
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
MANY AMERICANS PREPARING FOR A RECESSION DESPITE SIGNS THAT SAY OTHERWISE: SURVEY
Mortgage rates head in the right direction
Moderating mortgage rates have helped improve housing affordability in the fourth quarter, according to the report. Mortgage rates have fallen by more than a percentage point since late October, and Fannie Mae anticipates they could reach 6% if the Federal Reserve cuts interest rates this year.
Housing affordability improved 1.2% in the fourth quarter compared to the previous quarter, according to NAR. Consumers with a 20% down payment paid roughly $2,163 compared to $2,189 on monthly mortgage payments. That figure is still 10% more expensive – or $196 – than what consumers paid one year ago.
The Fed anticipates several interest rate cuts this year but has yet to set a timeline for how soon or far it will go. Fed officials have predicted at least three rate cuts this year, with interest rates expected to tick down to 4.6%, according to the central bank’s updated economic forecasts in its Summary of Economic Projections (SEP).
Fannie Mae has based its forecast that mortgage rates will drop below 6% by the end of 2024 on the Fed moving faster than anticipated on interest rate reductions. How soon cuts will come depends on how fast inflation returns close to that 2% target rate or if the Fed senses that the U.S. economy is headed into a recession.
If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.
COLLEGE TUITION PAYMENT PLANS MAY PUT STUDENT AT RISK: CFPB
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.
Read the full article here
