Frazzled home buyers may need to sit down and take a few deep breaths before reading any further. Those rapidly rising home prices have hit an all-time high—and show no signs of slowing down before Labor Day.
The median price of an existing (i.e. not newly constructed) home across the nation reached $239,700 in May, according to a recent report from the National Association of Realtors®. That’s up 3.8% from April and 4.7% from May of 2015.
The previous peak was last June at $236,300.
“The price increases are a natural result of the very strong demand for homes against very limited homes for sale,” says realtor.com’s chief economist, Jonathan Smoke. “It’s pent-up demand… coupled with the lowest mortgage rates we’ve had in three years.”
He predicts prices will continue to surge this summer as buyers fight over the not-nearly-enough residences on the market.
But there is hope: the mad rush for available homes is expected to taper off come Labor Day, Smoke says.
“There’s a higher probability that interest rates will go up [in the fall]. School is back in session, which means fewer [parents] are looking to move,” he says, adding that the presidential election will cause some potential buyers in certain areas of the country, like Washington DC, to postpone home buying decisions.
The high prices have been a boon to sellers who are putting their properties on the market and cashing in.
“More homeowners are realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” NAR chief economist Lawrence Yun said in a statement. “Repeat buyers are using the proceeds from the sale of their previous home as their down payment.”
Residences also continued to fly off the proverbial shelves at the highest volume for the month of May since 2005—before the financial crisis walloped the world economy. This May, the number of sales hit 526,000, a 11.9% jump from April and a 6.3% rise from May of last year, according to the report. Those numbers were not seasonally adjusted, which is to say they weren’t smoothed out over a 12-month period to account for seasonal fluctuations.
The cost of becoming a homeowner is by far the highest in the West, home to astronomically expensive areas like San Francisco and nearby Silicon Valley, according to the report. The median home price in the region was $346,900 in May and the number of sales rose 0.9% year-over-year to 114,000.
The next most expensive region was the Northeast at $268,600, according to the report. The region also saw the fewest sales, at 69,000, in May. But the number of existing homes sold jumped 11.3% from the same time a year earlier.
The region was followed by the South, where the median home price hit $211,500. The warm weather region saw the most sales at 211,000, a 8.2% rise from a year earlier.
Last up was the Midwest, where prices reached $190,000. The number of sales reached 132,000 in May, a 5.6% bump from May of 2015.
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