Will Home Prices Continue To Rise?
Nothing has been able to slow them yet
Home prices continue to march upward. Nothing has been able to slow it down. Interest rates spiking to over 7% hasn’t lowered prices. The price rise just continues.
The median sale price of homes sold is now at $397,250.
Median asking price of newly listed homes for sale is at $414,975.
New highs just continue. That comes as we’ve seen the pace of home sales fall. May saw the 3rd fewest homes sold in the last decade. From Redfin;
There have been just two months in the past decade with fewer home sales: October 2023, when mortgage rates jumped to a 23-year high, and May 2020, when the onset of the pandemic brought the housing market to a halt and home sales to a record low.
US housing starts and permits also took a tumble. That makes the 5th decline in the past 6 months. It’s the worst since June 2020.
Even the inventory of new homes for sale has climbed to its highest level since January 2008. 481,000 new homes are for sale.
Despite all this, prices continue to hold steady and grind higher.
Household expectations for prices is that they’ll continue moving higher. Torsten Slock at Apollo had the following note and chart this week.
Households have record-high expectations for how much home prices will be going up over the coming five years ... extreme bullishness about home prices and stock prices makes the economy more vulnerable if asset price inflation stops or reverses.
Goldman Sachs and Moody’s also call for a rise over the coming years in national home prices.
The combination of record high prices and high mortgage rates has only made affordability worse. You could characterize this current state of housing as a housing affordability crisis.
If prices haven’t turned lower by now, what makes them? What’s to stop them from going even higher?
If the Fed cuts rates in the coming months like most expect, mortgage rates will go lower. How does that help lower home prices?
It doesn’t. It will likely push prices up even higher.
The Coffee Table ☕
- who writes Unfiltered by Tim Denning, wrote a wonderful piece called, I Used to Be Impressed by People Who Had a Lot of Money — But Now I’m Impressed by People Who Have a Lot of Free Time. So much of what he writes in this I completely agree with. The freedom of time component continues to be the true measure of wealth for many.
With having two kids 8 and under, this post by
who writes Slow Boring really hit home for me. High-pressure youth sports is bad for America. It’s an interesting take on a hotly debated topic among parents with kids.Here is the yearly average rate change for homeowners insurance for each US state. Look at what happened in 2023. Could the 2024 increases be even worse?
Source: Lance Lambert
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