The housing slowdown that has given hope to price-squeezed buyers, struck fear into the hearts of sellers, and captivated real estate aficionados from coast to coast appears to have taken a break. Home list prices aren’t coming down, it seems—instead they reached a new all-time high as the busy spring market begins.
Median list prices crossed the $300,000 mark for the first time in March, according to a recent realtor.com® report. And while annual price growth had been slowing and is even down in a few parts of the country, nationally list prices shot up 7.2% year over year in March. That’s significantly more than inflation, which was just 1.5% in February.
“Prices are continuing to rise and they’re going to get higher,” says Danielle Hale, chief economist of realtor.com. “The same property today that’s for sale is more expensive, and we’re seeing more higher-end homes for sale.”
So why are prices rising if the real estate market is supposed to be softening?
“In a slowing market, it’s not uncommon to have a gap between list prices and sale prices. It can take sellers a little bit of time to catch up to the reality,” Hale says.
The softening in the market began over the summer, when wild price acceleration of the past several years began slowing down. That was due to a rise in inventory as more sellers trying to capitalize on high prices rushed to list their properties—at the same time that many buyers took a pause when prices and mortgage rates simply got too high. The result? There were price cuts in some of the most expensive markets, and prices didn’t climb quite as high as they did in previous years.
Overall, there was a 4% bump in the number of homes for sale in March. That should be a boon for buyers as the greater the supply, the more prices typically fall. But hold on, optimists: The number of affordable homes priced at $200,000 and below was down 9% annually. That’s making it harder for first-time and other cash-strapped buyers to become homeowners.
The increase in housing inventory came primarily from the luxury market. There was an 11% yearly rise in the number of $750,000-and-up residences going on the market in March.
One bright spot for the nonmillionaire crowd is that mortgage rates fell to just 4.06% last week on 30-year, fixed-rate loans—giving buyers some much-needed financial relief. That’s the lowest they’ve been since January of last year. It’s also well under the nearly 5% mark they were hovering around in November.
Just a single percentage point increase can add about $100 (or more) to a monthly mortgage bill on a $300,000 home. That adds up over time to thousands (if not tens of thousands) of dollars over the life of a 30-year loan.