Home price growth reaches highest level since last year: Redfin
The typical cost of a house in the United States is approximately $382,000, according to data from Redfin.
The cost of housing has risen significantly over the course of the year, even though there has been only a moderate level of interest in purchasing homes, as determined by Redfin's analysis.
According to Redfin, the mean cost of a house in the United States reached $382,000 by the conclusion of the four-week period that concluded on July 23. This figure indicates a rise of 2.6% when compared to the previous year and signifies the most substantial growth experienced since November.
Redfin attributes this increase in home prices to the scarcity of available homes, which it claims has decreased more than the demand. As a matter of fact, the report states that the number of available homes has experienced its most substantial decline in 18 months. Moreover, there has been a 22% decrease in new home listings compared to last year, and the total number of homes for sale has dropped by 17%, marking the most significant decrease in a year and a half. Redfin's Homebuyer Demand Index, which measures the demand for home tours and other services related to buying a home from Redfin agents, has also fallen by 3% compared to the previous year.
There were notable rises in home prices primarily in Miami (with an annual increase of 11.9%), Milwaukee (9.3%), and Cincinnati (8.9%). Conversely, certain regions experienced significant decreases in home prices. Below are the areas that witnessed declines in home prices.
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Homeowners' 2023 Homebuying Regrets
In the midst of exorbitant housing costs, approximately 93% of individuals who purchased a home expressed feelings of remorse regarding their homebuying ordeal in 2023, according to a study conducted by Clever Real Estate. This constitutes a rise from the 72% reported in the previous year. Moreover, more than half (58%) believed that they paid too much for their property, as stated in the survey.
According to George Ratiu, Chief Economist at Keeping Current Matters, a person who bought a $500,000 home at the beginning of 2022, assuming they made a down payment of 20% and got an average interest rate of 3.1%, would have had to pay around $1,700 every month (excluding property taxes and insurance). However, nowadays, someone looking to purchase a similarly priced home would have to consider a much higher monthly payment of $2,500, which is a notable difference.
However, a scarcity of available properties could also be preventing a pleasant experience for those seeking to purchase a home.
The supply of houses available for sale has been decreasing as homeowners who obtained historically low mortgage rates have been putting up fewer properties for sale, as analyzed by Realtor.com.
The increase of new listings decreased in July for the fourth consecutive month, falling below the levels of last year (6.4%) for the first time since April 2022.
Realtor.com's Chief Economist, Danielle Hale, stated that although it is promising that list prices have decreased for the second consecutive month compared to the previous year, the limited number of available homes for sale is causing home prices to remain stable. She also mentioned that the declines in prices for the rest of the year will be relatively small. Hale explained that the increase in interest rates is affecting the purchasing power of buyers, but they seem to be adjusting to the higher mortgage rates faster than sellers. This is because many sellers are still holding onto their homes due to the lower interest rates they obtained and are hesitant to use their home equity to buy a new one. As a result, home sales are decreasing and are expected to reach the lowest annual total in over ten years.
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Homebuyers are discovering more advantageous opportunities in the following urban areas, according to the results of a recent survey.
Possible Housing Market Recovery
Redfin's analysis suggests that the housing sector could receive a boost from the Federal Reserve's recent uncertainty about a potential recession, despite the unstable housing market.
Starting from 2022, the Federal Reserve has increased interest rates on 11 occasions with the aim of bringing down inflation to meet their target rate of 2%. During the July meeting, the Federal Reserve decided to raise interest rates by 25 percentage points. However, it is possible that the Federal Reserve's proactive approach to managing the economy might not have been strong enough to potentially plunge the country into a recession.
According to Chen Zhao, the lead researcher of Redfin Economic Research, this is positive information for the real estate market for a few reasons. The fact that a recession is being avoided implies that most Americans will be able to retain their jobs and will have increased trust in buying expensive items such as houses. Additionally, the consistent effort in controlling inflation indicates that although mortgage rates may remain high for a few months, they are expected to decrease before the year concludes. This should motivate both sellers and buyers to actively participate in the market.
Furthermore, there are indications of a decrease in inflation. According to the consumer price index (CPI), the rate of inflation dropped to 3.2% compared to the same time last year in July.
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