The median price of a home in the U.S. hit an all-time high, and is likely to continue to rise.
According to a recent report from the National Association of Realtors®, buyers paid a median price of $267,500 for an existing home in May. Existing homes are considered homes that have been lived in previously, as opposed to new homes that were recently constructed and have never been lived in before. This median price is nearly 3% higher than it was the month prior, in April.
“It’s economics 101: Demand from buyers is high, and the number of homes for sale is pretty limited,” said Chief Economist Danielle Hale of realtor.com®. Hale says the limited supply is causing prices to rise. “Especially for entry-level homes in move-in ready condition, buyers can expect lots of competition, potential multiple offers, bidding wars, and homes that sell quickly.”
New Home Prices
Despite higher prices, existing homes remain more affordable than new construction, recent data shows.
The median price of a new home was $312,400 in April, nearly 16.8% higher than the median price for an existing home, according to recent data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
Although they are generally priced lower than new homes, existing homes experienced a dip in sales in May. NAR suggests this could be due to steadily rising prices.
The number of closings fell 0.6% from April to May and 3% year-over-year to reach 4.81 million, based on the seasonally-adjusted numbers from the report.
Sales were highest in the South, at 2.03 million. The median price for homes in this region was $239,400.
The most affordable region, the Midwest, saw the second-highest sales figures at 1.18 million. That reflects a 2.5% drop, both month-over-month and year-over-year.
The West hit 1.02 million home sales and was the least affordable region. The median home price in this region rose to $399,800 — 7% higher when compared to the same time a year ago.
The Northeast had 580,000 home sales, up 5.5% from the previous month. Despite the increase in month-over-month sales, fewer homes sold in this region when compared to the same time last year. The median home price in the Northeast was $274,100.
“Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market,” said Lawrence Yun, chief economist for NAR, in a recent statement.