For those who are purchasing a home, the year has been difficult thus far because of the combination of rising loan rates and high housing costs. Regretfully, there might not be much respite for the rest of 2024. (Photo : by Stefan Zaklin/Getty Images)
Homebuyers face difficulties in 2024 due to a combination of rising mortgage rates, around 7% for a 30-year fixed mortgage, and high housing costs, with little relief expected as the Federal Reserve maintains high rates to combat inflation.
The median home price in the U.S. hit a record $383,725, requiring a six-figure salary for affordability, as low inventory and high property prices force many buyers out of the market, with no price declines in major metro areas in April.
Higher mortgage rates also impact current homeowners, many of whom are reluctant to sell and take on new, higher-rate mortgages, contributing to a nationwide shortage of homes for sale.
For those who are purchasing a home, the year has been difficult thus far because of the combination of rising loan rates and high housing costs. Regretfully, there might not be much respite for the rest of 2024.
A 30-year fixed mortgage's rate is currently around 7%, not far from its highest level in almost 20 years. The Federal Reserve is anticipated to postpone lowering its benchmark rate as long as inflation stays persistently high. According to Freddie Mac, the central bank will only lower rates once in 2024, and that will be close to the end of the year.
The Federal Reserve has stated that rather than taking the chance of reducing rates too soon and igniting yet another round of price surges, it would prefer to maintain rates high until inflation slows to about 2% annually. However, this has led to consumers being hit hard by increased lending fees for anything from credit cards to mortgages.
Rising Home Prices and Low Inventory Create Challenges for American Homebuyers This Spring
This spring, purchasing a house has become more difficult for many Americans, especially those in middle-class or lower-class income levels, due to factors other than just mortgage rates. Redfin reports that the median house selling price in the United States reached a record $383,725 due to low inventory and rising property prices, forcing some buyers out of the market.
According to Zillow, the average American home now requires a six-figure salary due to the rising cost of housing. In April, home prices did not decline in any of the country's major metro regions for the first time in over two years, according to a survey from Redfin.
Some current homeowners have also been impacted by higher mortgage rates. Some people are hesitant to sell their homes if it means taking out a new mortgage at today's rates because many purchased or refinanced their residences during the epidemic's early years when interest rates fell below 3%.
Economists claim that there is a nationwide scarcity of new and existing homes for sale due to hesitant sellers and new developments not keeping up with demand.
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