Home prices are up to yet another record high at the start of the spring buying season, causing some weary homebuyers to throw in the towel altogether, Realtor.com reports. The median list price is up to $405,000 for the first time on record, a 13.5% year-over-year jump and a 26.5% gain from March 2020.
Soaring prices are a direct result of waning inventory across the U.S., especially as demand surges at the close of the homebuying offseason. The number of active listings fell 18.9% year-over-year in March and a whopping 62.3% over a two-year period. Unless significant housing supply is added to the market ahead of a busy buying season, prices will continue to creep toward new highs, leaving buyers with few affordable options.
As if high home prices weren’t bad enough news, homebuyers today are also contending with rising interest rates. The mortgage rate jumped to 4.42% for the week ending March 25 for 30-year fixed-rate loans, according to Freddie Mac. That’s the highest it’s been in three years.
And since the Federal Reserve is expected to raise its rates several more times this year, mortgage rates are expected to follow by continuing to climb.
Facing rising mortgage rates, record-high home prices, and very few homes for sale, more and more buyers are reaching a breaking point and calling off their house hunt, at least for now.