The median price of an existing American home has hit a record high, increasing 2% year-over-year in June to $435,300.
The value of an existing home has increased almost $141,000 in the past five years, according to the latest “Existing-Home Sales Report”, issued by the National Association of Realtors (NAR).
Just 12 months ago, the median price was $426,900.
We have now seen the 24th successive month of year-over-year price increases.
NAR says that years of undersupply continue to push the value of existing homes higher.
First-time buyers were being held back and more supply was needed to help them break into the market, it said.
“The record-high median home price highlights how American homeowners’ wealth continues to grow – a benefit of homeownership,” said NAR Chief Economist Dr Lawrence Yun.
“The average homeowner’s wealth has expanded by $140,900 over the past five years.”
Despite the new record, the June data was not all good news.
In the immediate term, sales fell 2.7% in June.
The market is struggling to transact at its normal pace. If the current rate of deals continues, only 3.93 million homes would be sold over the next 12 months. The market typically performs above the 4 million benchmark.
Currently, we have 1.53 million units for sale, which equates to a supply that would last 4.7 months.
NAR said: “High mortgage rates are causing home sales to remain stuck at cyclical lows. If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners.”
NAR joined the chorus seeking a cut in interest rates by the Federal Reserve.
Dr Yun said: “If mortgage rates decrease in the second half of this year, expect home sales to increase across the country due to strong income growth, healthy inventory and a record-high number of jobs.”
Freddie Mac says that, as of mid-June, the average mortgage rate was 6.75%. A 30-year fixed-rate mortgage stood at 6.72%, compared with 6.77% 12 months ago.