High Housing Prices in the USA: Causes and Consequences

Posted by:Aleksandr Belov Posted on:Aug 30,2023

This article examines the current situation in the real estate market in the USA, where housing prices remain high despite some decrease. One of the reasons for this situation is the lack of supply, which creates difficulties for buyers. The article also discusses the impact of rising mortgage rates on housing demand. At the same time, the article notes some growth in home sales, but it is still below pre-pandemic levels.

Housing prices in the USA continue to remain high, despite some decrease compared to the record highs set last year. According to a report by Redfin, in July of this year, housing prices increased by 1.7% and reached $421,872. This is only 2.5% below the record price of $432,476 set in May 2022.

One of the reasons for the high housing prices is the ongoing lack of supply. Despite weak demand from buyers, who face issues of low inventory, high purchase costs, and rising mortgage rates, housing prices remain high.

The average 30-year fixed mortgage rate in July was 6.84%, higher than the previous month and the previous year. According to Freddie Mac, this week the rate reached 7.23%, the highest level since 2001. This also affects housing demand and keeps prices high.

Meanwhile, home sales in the USA increased to 387,000 in July, the highest level this year. However, this is only 5.4% higher than the lowest level in March. On an annual basis, pending sales were 16% lower than in July 2022.

Housing supply has also decreased. The total number of homes listed for sale nationwide decreased by 3.9% in July compared to the previous month and by 19.5% compared to the previous year. This is the largest annual decrease in over two years.

Overall, housing prices in the USA remain high due to the lack of supply and rising mortgage rates. This creates difficulties for buyers who face limited choices and high prices. At the same time, home sales show some growth but remain below pre-pandemic levels.

Aleksandr Belov

Author and editor of the ultramodern-hotels.com blog