Median US Home Prices Hit Record High of $394,000, Redfin Says

Homes for sale in Maryland on Nov. 12, 2023. (Madalina Vasiliu/The Epoch Times)

Home prices in the United States hit a new high this month, with a decline in mortgage rates triggering a slight fall in monthly payments, according to real estate brokerage firm Redfin.

“The median U.S. home-sale price hit an all-time high of $394,000 during the four weeks ended June 9, up [by] 4.4 percent year over year—the biggest increase in about three months,” Redfin said in a statement on June 13.

The brokerage noted signs that home price growth could soon ease, such as data showing that 6.5 percent of sellers cut their average asking prices, the highest share since November 2022. In metropolitan areas such as Austin, Texas; Fort Worth, Texas; San Antonio, and Portland, Oregon, prices are already declining, according to Redfin.

Still, as prices remain high, the average homebuyer’s monthly housing payment remains elevated at $2,829, which is $30 below the record high hit in April. The decline in median housing payments despite record sales prices was attributed to falling mortgage rates.

Data from Freddie Mac show a decline to 6.95 percent in the average mortgage rate for a 30-year fixed-rate mortgage for the week ended June 12, down from 7.03 percent a week earlier. Mortgage rates are trading lower than the 7.22 percent of early May.

Sam Khater, Freddie Mac’s chief economist, attributed the decline to a cooling economy. Annual inflation slipped to 3.3 percent in May from 3.4 percent in April and 3.5 percent in March. Shelter inflation was at 5.4 percent in May, down from 6 percent in January.

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

“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.”

Easing Mortgage Rates, Housing Demand

In the June 12 meeting, the U.S. Federal Reserve kept interest rates unchanged within a range of 5.25 percent to 5.5 percent. In addition, it now expects only a single rate cut this year.

Redfin speculates that the Fed may revise this decision at the next meeting because of lower inflation. It predicts that mortgage rates will decline further over the summer, which would keep monthly housing costs from spiraling up again.

According to an April analysis by Bankrate, Americans now need an annual income of $110,871 to afford a median-priced home of $402,343. That’s an almost 50 percent increase over a period of just four years.

A six-figure annual income is now mandatory to afford a median-priced home in 22 states and the District of Columbia. Four years ago, only six states and the District of Columbia had such a high requirement.

Meanwhile, a recent report from real estate marketplace Zillow states that home value growth has eased, with the housing market moving closer to a balance between buyers and sellers. It speculates that relief from high home prices may be on the horizon.

“Zillow’s Market Heat Index shows the nation is becoming a bit friendlier for buyers and is headed toward ‘neutral’ territory, but sellers still hold a slight advantage,” the report reads.

“Nationwide, nearly a quarter of all homes for sale received a price cut in May—the highest share in at least the last six years for this time of year. There’s a good chance that buyers can purchase a lingering property for less than list price.”

Among the 50 largest metropolitan areas, Zillow found Buffalo, New York; Hartford, Connecticut; and San Jose, California, to be the top markets for sellers. The housing markets in Memphis, Tennessee; New Orleans; Jacksonville, Florida; and Miami were found to be biased toward buyers.

Zillow expects home values to grow by only 0.4 percent in 2024 and then move downward by 1.4 percent by May 2025.