Home prices logged a new record, but experts say there may be hopes of a slowdown in sight.
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Home prices have jumped a whopping 12% since last February, marking the highest annual price gain since 2006. The increase puts the national median home price at just under $350,000.
Those are just national numbers, though — and in some markets, prices have increased even more.
In Phoenix, for example, home prices are up 17.4% over the last year. On a $300,000 house, that’d mean an increase of $52,000 in just the past 12 months. San Diego and Seattle also saw similarly high price jumps of 17% and 15.4%, respectively.
All in all, price gains were above-average (and in the double digits) in each of the country’s 20 largest cities.
“The housing market is running full steam ahead,” says Selma Help, deputy chief economist at CoreLogic, which produces the S&P Case-Shiller CoreLogic Home Price Index. “Many observers are questioning where the train is heading and what the next stop will look like.”
The market’s ever-rising prices stem from two key factors: Extremely low housing supply and unprecedented demand from buyers.
Currently, the U.S. has just a 3.6-month supply of homes — nearly the lowest point on record. When you throw in the pandemic-spurred clamor for housing, you have an ultra-competitive landscape marked by bidding wars, inflated offers and continuing price growth.
Fortunately, experts say there may be light at the end of the tunnel — at least if things stay on their current trajectory.
“No one really knows when home prices may decrease, but if rates continue to increase as the economy improves and home prices continue to rise, buyers will be unable to afford homes on the market, forcing sellers to slowly lower their prices,” says Glenn Brunker, president of mortgage company Ally Home.
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Hepp says more inventory may be on its way, too, which should also help “slow the speeding train.” (Note the word “slow,” not “stop.”)
“There are early signs of increasing availability of for-sale homes and a squeeze on new buyers’ budgets due to high price tags and rising rates,” Hepp says. “Given these factors, home price appreciation should ease in coming months but remain in high single digits across most of the country.”