After some mildly good news on mortgage rates, we get news regarding U.S. housing prices. This time, instead of prices going down, as we’d hope to see, we see an all-time high in U.S. home sale prices. According to Redfin.com, the median sale price for a new home in May was $439,716, a record high in the United States.
For those looking to purchase a new home, this is not good news. Many may have been encouraged by the reports of lower interest rates, however this news offsets any positive ground made in the housing market. With continued increases in home prices, and high interest rates, 2024 may go down as one of the most difficult years to buy a home.
Chart curteousy of Redfin.com
This news will undoubtedly make an impact on future interest rates, especially those set by the Federal Reserve. The Fed recently decided to keep interest rates set, instead of dropping them as many expected. With news of increasing house prices, their incentive to lower rates drops drastically.
What to do with this news?
This is an important factor in the decision-making of many households. “Should I sell my house?” “Should I buy a new house?” “Should I buy my first house?” These are critical questions to the financial well-being of many and should be carefully considered. For those who are waiting to buy a new home, there needs to be a few considerations. Do you have a home to sell? Do you have a down payment? Does your down payment depend on the sale of your current home? How long have you been waiting? Does your budget/income allow for a house payment?
Many will sit and wait for house prices or interest rates to go down. However, it’s difficult to know when the prices or rates will go down enough to make a significant impact on your decision-making. Your best bet is to reference your budget and a mortgage calculator and see if you can afford a home. If you can fit the mortgage payments into your monthly budget, then factors like interest rates are less important (as you can refinance later). Your overall home price and monthly payments should be well-noted. If the housing market sees a large drop or crash within the next few months/years (which we don’t know whether or not it will), then the value of your home may be lower than the amount you owe. This can be devastating to your financial outlook, however being able to afford these payments is still top priority.
For more resources and information on how to have strong financial literacy, check out some tools below.
Mortgage Calculator
Freedom Finances – Financial Literacy
Redfin.com U.S. Housing Market
