US Home Prices Register 3rd Consecutive Monthly Gain

A home for sale in Irvine, Calif., on Sept. 21, 2020. John Fredricks/The Epoch Times

Home values in the United States increased last month, and prices are expected to continue rising next year amid high mortgage rates, according to the real estate brokerage Redfin.

“U.S. home prices grew 0.5% from a month earlier in November on a seasonally adjusted basis, the third consecutive month with a 0.5% increase,” the company said in a Dec. 24 report. Out of the 50 most populous metro areas in the country, home prices rose in 37 of them.

The biggest gains were recorded in Nassau County, New York (1.6 percent), followed by Charlotte, North Carolina (1.4 percent), and Minneapolis, Minnesota (1.3 percent).

“On a year-over-year basis, home prices rose 5.7%, the lowest annual increase since October 2023,” the report said.

November was the sixth straight month to register a year-over-year slowdown in home price growth and the second consecutive month where growth was below 6 percent.

Redfin Senior Economist Sheharyar Bokhari said he expects prices to likely “keep rising steadily” throughout 2025, in a manner similar to this year.

“Elevated mortgage rates will cause many homeowners to hang onto their homes—and the low rates they have locked in. That means there will be enough buyers competing over a relatively low number of homes to keep prices ticking up consistently,” Bokhari said.

While overall home prices grew in November on a monthly basis, the average price of new houses sold last month declined by more than 7 percent month over month, according to data from the U.S. Census Bureau.

The median sales price of new homes in November was $402,600. This was “lower than the $406,100 median sales price for existing homes that month, flipping the typical trend that sees new homes sell at a premium,” real estate listings website Realtor said in a Dec. 23 post.

Additionally, 25 percent of all new homes sold last month were priced at less than $300,000, up from 13 percent in October.

“It’s a common misconception that new builds are out of the price range of prospective buyers, when the reality is that new construction is often offering better prices, better financing, and a better product than the existing-home segment is now,” Realtor Senior Economist Joel Berner said.

Elevated Mortgage Rates

A key factor affecting housing affordability is mortgage rates. In the past two years, the average weekly rate on a 30-year fixed-rate mortgage has remained above the 6 percent level, up from less than 3 percent in 2021, according to data from Freddie Mac.

The U.S. Federal Reserve recently cut its benchmark interest rates but indicated a slower-than-expected pace of cuts next year, citing inflation concerns.

Real estate marketplace Zillow said in a Dec. 18 post that the Fed is now expected to be more reliant on economic data when deciding whether to cut rates. As such, this could result in volatility in mortgage rates.

“Many homeowners who locked in mortgage rates at record lows are coming to terms with the reality that sub-3% rates may not return soon. As time marches on, life events like household changes or new jobs push sellers to list their homes. If mortgage rates dip, sidelined buyers and sellers should come rushing back,” Zillow Senior Economist Kara Ng wrote.

Fannie Mae said in a Dec. 20 note that the Fed’s decision to lower the number of rate cuts over the next two years could “potentially move mortgage rates higher.”

The three-month annualized rate of core inflation continues to remain high at 2.5 percent, which Fannie Mae says supports its expectation that the central bank would pause rate cuts early next year.

Some experts no longer view high mortgage rates as a significant impediment to home sales.

“Buyers are coming out of the woodwork because they’ve accepted that rates in the 6% to 7% range are the new normal,” said David Palmer, a Redfin Premier agent in the Seattle area. “They know that if they wait to buy, mortgage rates will probably stay the same but prices will be higher.”