The Cost of Buying a Home Continues to Rise Due to Limited Inventory, Report Says
A new report from Realtor.com reveals that the cost of purchasing a home in the United States continued to increase in September, driven by limited inventory that is driving up sale prices. The report, known as the Monthly Housing Trends Report, provides valuable insights into the state of the real estate market.
According to the report, home listing prices nationwide experienced a rise of 0.4% in September, reaching a median price of $430,000. Additionally, housing inventory decreased by 4% for the third consecutive month. These numbers clearly indicate the ongoing trend of rising costs and limited availability of homes for sale.
Comparing September 2021 to the same period last year, there is a staggering 37.5% jump in the median listing price. Furthermore, the active listings have dropped by a significant 42.7%. These figures highlight the rapid pace at which prices are increasing and the scarcity of homes on the market.
Taking a closer look at the Hartford-East Hartford-Middletown metro area, the median listing price stands at $400,000. This marks a 7.4% increase compared to last year. However, the active listing count has decreased by 17.7% year-over-year, indicating a decrease in the availability of homes for potential buyers.
The region’s median days on the market remain stable at 37 days. In September, 8% of listings reduced their price, suggesting that sellers are adjusting their asking prices to attract more buyers. However, nationally, the percentage of homes with price reductions decreased from 20.2% in September 2022 to 17.8% this year.
Danielle Hale, the chief economist for Realtor.com, acknowledged the challenges faced by buyers in the current market. She stated, “Buyers still struggle with the triple threat of rising listing prices, record-high mortgage rates, and limited inventory, making affordability a continued concern.” Hale further explained that higher mortgage rates have led many homeowners to feel “locked in” to their current rates, resulting in a low number of homes available for sale.
The report also shed light on the impact of rising mortgage rates on the overall affordability of homes. Financing 80% of the typical home cost increased by approximately $256, or 12.4%, compared to a year ago. This rise outpaced wage growth (+4.3%) and inflation (+3.7%), further exacerbating the affordability issue faced by potential homebuyers.
While new construction has seen some growth, it is still insufficient to close the inventory gap. As a result, low inventory continues to drive buyers towards new homes. With limited supply and high demand, the cost of homeownership is likely to remain high in the coming months.
In conclusion, the Realtor.com report paints a clear picture of the current state of the real estate market in the United States. Limited inventory, rising prices, and high mortgage rates are converging to create challenges for potential homebuyers. As the housing market continues to evolve, it will be crucial to closely monitor these trends and their impact on affordability and the overall economy.