We bring you the latest news from the USA’s property market, covering everything from prices to the economy.
House prices continue to rise
House prices in the US have risen significantly in the last year, with new home prices up almost 20% to an average of $450,600 and existing homes up almost 15% to an average of $391,200.
A combination of higher mortgage rates and fewer houses on the market are contributing to the price rises.
New home sales across the US sank 16.6% in April to 591,000, the lowest number since April 2020. The largest fall in sales was seen in the South and Midwest. The number of existing home sales also fell by 2.4%.
“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” said National Association of Realtors (NAR) Chief Economist Lawrence Yun.
US mortgage rates have been impacted by the recent interest rate hikes from the Federal Reserve (America’s central bank). The Fed raised rates to try and tackle America’s soaring inflation, currently at a 40-year high of 8.3%, however this has subsequently pushed up mortgage rates. The average rate on a 30-year, fixed-rate mortgage was 4.98% in April, up from 4.17% in March and much higher than the 2021 average of 2.96%.
Nonetheless, homes are not staying on the market for long at all, with the average property selling in just 17 days. Interestingly, all-cash buyers accounted for more than one quarter of the sales in April.
Will we see price rises slowing down any time soon?
It’s possible. The Federal Reserve has indicated that it could hike interest rates at least two more times, a move that would push US mortgage rates up even further. As borrowing becomes more expensive, buyer activity is likely to fall. As demand cools, prices could follow.
In addition, while there is a shortage of homes on the markets nationally, this is not the case in all states. Some of the hottest markets, like California and Colorado, are actually seeing a faster increase in the number of available homes than the national average. As supply continues to increase, this will take some of the pressure off and potentially bring house prices down.