Home prices just hit a record high. Here are 4 things to know about housing

mortgage, home, home prices, housing, home prices just hit a record high. here are 4 things to know about housing

Home prices hit a record high in May even as home sales fell. High interest rates are keeping many would-be buyers and sellers on the sidelines. Brandon Bell/Getty Images North America hide caption

toggle caption Brandon Bell/Getty Images North America

It's a tough time to buy a home.

Home prices jumped to a record high last month, according to data out this week. Elevated mortgage rates kept many would-be buyers and sellers on the sidelines — and the lack of homes for sale is driving up prices for homes that are on the market.

Here are four things to know about the current housing market.

Not many people are buying — or selling

May is typically peak season for buying and selling houses. But fewer existing homes were sold last monththan in April. And sales were down 2.8% from a year ago, according to the National Association of Realtors.

A key reason is the elevated mortgage rates across the country. They have made it more expensive to buy a house, pushing some would-be buyers out of the market. In addition, many people who already own homes are reluctant to sell, since that would mean giving up their current, cheaper mortgage.

The relatively few homes that are selling are typically going for higher prices. The median price of a home sold in May was $419,300 — an all-time record.

Average home prices are climbing because the more affordable end of the market, including starter homes, has largely dried up.

"At lower price points, people are being priced out of the home-buying market, and there's just less inventory when we think about homes that are under $250,000," says Jessica Lautz, deputy chief economist for the Realtors association.

At least interest rates are not as high as they were

There is some good news: Interest rates have fallen slightly in recent weeks. The average rate on a 30-year mortgage this week was 6.87%, according to Freddie Mac, down from 7.2% in early May. And mortgage rates could fall further if the Federal Reserve decides to cut borrowing costs later this year.

Still, rates are more than twice as high as they were before the pandemic. Higher interest rates, along with higher home prices have dramatically increased the monthly payment required to buy a home today.

A few more 'For Sale' signs are popping up

There's other promising news. While the number of existing homes on the market is still low by historical standards, it is inching up. According to the Realtors association, there were 1.28 million homes for sale at the end up May — 18.5% more than a year ago.

While higher interest rates have kept many homeowners feeling "locked in" to their current home, eventually life events can force some people to move.

"Perhaps they have a new job or a new baby or a family change," Lautz says. "We're seeing new inventory come into the market because of these traits."

But builders are no longer coming to the rescue

The shortage of existing homes on the market has created an opening for builders, and for a time newly-built houses were helping to fill the gap in the market. In April, nearly a third of all homes for sale were newly built — compared to 13% before the pandemic.

New home construction is slowing, however, which could worsen the shortage of homes for sale. Builders broke ground on 5.2% fewer single-family homes in May than they did in April. Building permits for future construction were also down 2.9%.

OTHER NEWS

13 minutes ago

8 storylines to follow as the Paris Summer Olympics get underway

13 minutes ago

Martin Kemp Leading UK Serial Killer Thriller ‘Doctor Plague’

13 minutes ago

10-year Treasury yield dips as investors closely monitor economic data

13 minutes ago

French prosecutors investigate gang rape allegations of an Australian woman who was visiting Paris

13 minutes ago

'I love you robo-dad': Meet a family using AI to preserve loved ones after death

17 minutes ago

Elizabeth Struhs: Cult-like church group member's texts wishing his father 'peace, healing and comfort' as eight-year-old diabetic girl lay dying are revealed in court

17 minutes ago

Twist in case of AFL star who allegedly helped pull off burglary rampage that netted $350,000

17 minutes ago

Australia Olympics Covid outbreak deepens as THREE more stars test positive ahead of the Paris Games

17 minutes ago

Instant karma for pickpocket as he is brutally beaten with a stick in front of shocked holidaymakers by tourist who caught him trying to steal his wallet

17 minutes ago

How USA Basketball saved coach Jim Boylen after he lost brother, marriage, NBA job

17 minutes ago

How hard is fencing? We had a U.S. Olympian show us. Watch how it went

17 minutes ago

Soccer at 2024 Paris Olympics: How it works, Team USA stars, what else to know

17 minutes ago

Equestrian-Video emerges of Briton Dujardin whipping horse's legs

17 minutes ago

France conditionally confirmed as 2030 Winter Games hosts, IOC says

17 minutes ago

Rita Ora teases 'darker' and spicier album

17 minutes ago

The Weeknd serves up first preview of new music as new era draws closer

17 minutes ago

Joel Embiid Believes Jayson Tatum Has A Super Team: "If I Go 5-20, I Get Blown Out"

17 minutes ago

Donald Trump Challenges Secret Service Director's Roof Claim

17 minutes ago

INDIA bloc protests 'discriminatory' Union Budget 2024, demands equal treatment for all states

17 minutes ago

How to watch Chelsea vs Wrexham: TV channel and live stream for pre-season friendly tonight

17 minutes ago

Will political tensions overshadow the Olympic Games in Paris?

17 minutes ago

Cindy Crawford looks effortlessly chic in a halterneck navy dress as she departs her hotel in New York

21 minutes ago

Komodo dragons have iron-coated teeth to help rip and tear prey, say scientists

23 minutes ago

Monday is the hottest day recorded on Earth, beating Sunday's record, European climate agency says

23 minutes ago

Video: More holiday getaway chaos as volcano erupts sending huge tower of ash into the sky closing major international airport

23 minutes ago

Video: Shocking moment an endangered basking shark is struck by a boat in Ireland's National Marine Park is caught on camera - and scientists don't know if it made it out alive

23 minutes ago

Video: Team GB's three-time Olympic dressage champion Charlotte Dujardin WITHDRAWS from Paris Games over video showing her making an 'error of judgement' in a coaching session

23 minutes ago

She was 19 and caused a car crash. It was the other driver who came to her aid

23 minutes ago

Watch a livestream of Colorado’s ‘mega den’ of pregnant rattlesnakes

23 minutes ago

What Is Cellebrite, And What Kind Of Data Can It Recover?

23 minutes ago

Meninga’s major move to end 30-year NRL drought

23 minutes ago

Arsenal Transfer News Today: Calafiori MEDICAL, Gyokeres BACK ON, Zubimendi COMPETITION

23 minutes ago

Martin Platt to return to Coronation Street as part of Gail’s exit storyline

23 minutes ago

Boat hits massive 23-foot shark in rare video footage

23 minutes ago

Is it just me, or is FX starting to feel like the new HBO?

23 minutes ago

Baldur's Gate 3 dev says it's Larian's philosophy to 'fuel and reward' player creativity: 'They found a way to exploit the game, let them have it, it's awesome'

23 minutes ago

Best to miss several weeks with hamstring tear

23 minutes ago

Egypt have high hopes for football at Olympics despite absence of Mohamed Salah

23 minutes ago

Arsenal lay out two conditions to sanction Emile Smith Rowe exit this summer

23 minutes ago

Internet partially restored in parts of Bangladesh as local media report at least 197 deaths in clashes since July 16