Home prices have hit a record high, according to an industry report

Despite a slowdown in 2024 home sales, median U.S. home prices recently hit a record high of $394,000 - Photo by UnSplash +

But softening mortgage rates may help improve affordability

Despite a sharp slowdown in home sales so far in 2024, home prices have not gone down much, except in certain expensive housing markets. On a nationwide basis, prices have moved up to a record high, according to a report by real estate brokerage firm Redfin.

The median U.S. home sale price hit an all-time high of $394,000 during the four weeks ending June 9, up 4.4% year over year—the biggest increase in about three months. But Redfin sees signs that the increase in home prices is slowing.

For example, the report found that asking prices have leveled off, and 6.5% of home sellers are cutting their asking price, on average, the highest share since November 2022. Prices are falling the most in four U.S. metros: Austin, Fort Worth, San Antonio and Portland, Ore.

While home buyers should not expect a “crash” in home prices, Redfin expects to see a better market for buyers, especially since mortgage rates are trending lower. The latest report from Freddie Mac found the average 30-year fixed-rate mortgage this week is 6.95%, down from 6.99% the week before.

Redfin said it expects mortgage rates are likely to decline further over the summer, which would keep monthly housing costs from spiraling up again. The latest inflation reports – consumer prices were flat and producer prices dipped in May – suggest the Fed is making progress in its battle to reduce inflation.

‘Good for homebuyers’

“The latest inflation report is good for homebuyers because it has already sent mortgage rates down, though this week’s Fed meeting will temper mortgage rate declines,” said Chen Zhao, Redfin’s economic research lead. 

“But on the other side of the coin, if lower mortgage rates bring back more demand than supply, that could erase the possibility that home-price growth softens, and push prices up even further. Lower rates and higher prices may ultimately cancel each other out when it comes to homebuyers’ monthly payments.”

In other words, if lower rates produce more buyers than sellers, upward pressure on home prices may remain.

But for now, high home prices are keeping some prospective homebuyers on the sidelines. Pending home sales are down 3.5% year over year, the biggest decline in three months, and Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services from Redfin agents—is down 18%, sitting at its lowest level since February. 

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