House prices are at their highest point ever as the housing market continues to boom, leaving some buyers struggling to afford a home, according to a real estate group.
The median existing-home price topped $350,000 for the first time in May, a 23.6% increase from a year earlier, according to a Tuesday report from the National Association of Realtors (NAR). While existing-home sales fell 0.9% from April to May, prices continued to increase as supply struggled to meet demand.
A combination of home buyers leaving cities, low-interest rates, and constrained housing supply have caused prices to skyrocket, according to a report from Redfin. While the market has benefited sellers, some buyers have been priced out, The Wall Street Journal reported.
“Affordability appears to be now squeezing away some buyers,” Lawrence Yun, an economist for the NAR, told The Wall Street Journal. “There are so many people who have been outbid, frustrated they are unable to buy.”
The median existing-home price for all housing types saw a record year-over-year increase of 23.6% in May 2021. https://t.co/PifjAYdXzZ
— National Association of REALTORS® (@nardotrealtor) June 22, 2021
The high prices are likely to hit first-time buyers the hardest, as they lack home equity and have difficulty saving due to high rents, according to MarketWatch.
“Houses that just go on the market have no availability for showings,” first-time home buyer Kristin Mallory told MarketWatch. “When you do find something that fits your parameters, you are outbid.”
Constrained housing supply, one of the contributing factors to spiking housing prices, is partly due to the high cost of building new homes, according to Bloomberg. Supply chain problems due to COVID-19 pandemic lockdowns, along with rising inflation and labor shortages, have increased the prices for lumber, concrete, and other building materials, Bloomberg reports.
The lack of new construction has meant that housing supply cannot keep up with rising demand, inflating housing prices as a result.
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