Home prices hit an all-time high in March as buyers scrambled to close deals before mortgage rates rise even further.
The median existing-home price for all housing types in March was $375,300, up 15% from the year before, according to the National Association of Realtors. That marks more than a decade’s worth of consecutive year-over-year increases, the longest running streak on record.
“The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power,” said Lawrence Yun, NAR’s chief economist. “Still, homes are selling rapidly, and home price gains remain in the double-digits.”
Mortgage rates have been on the rise since the beginning of this year, with the latest average now at 5%. And more rate increases are expected.
Existing home sales, which include completed transactions of single-family homes, townhomes, condominiums and co-ops, dipped 2.7% from February and dropped 4.5% from the year before, NAR reported. But demand was still strong with homes typically staying on the market only 17 days in March.
“Home prices have consistently moved upward as supply remains tight,” Yun said. “However, sellers should not expect the easy-profit gains and should look for multiple offers to fade as demand continues to subside.”
As typically seen during the spring, inventory increased in March with 950,000 homes available at the end of the month, up 11.8% from February and down 9.5% from March 2021.
Part of the home price increase was due to a growing number of larger, more expensive home sales. Cash deals reached their highest share of sales since 2014, at 28% of all transactions.
Meanwhile, there remains a shortage of homes at the more affordable end of the market for first-time buyers.
The share of first-time buyers that bought in March ticked up a bit, to 30% from 29% in February, but is down from 32% a year ago.
“The number of first-time buyers is still historically low,” said Yun. “We would like to see it closer to 35% or 40%, but the affordability challenges have really limited the first-time buyers’ participation in the market.”