Home prices set another record in April, even as mortgage rates rose and the supply of homes for sale increased.
Home prices reached another record high in April, despite rising mortgage rates and an increased supply of homes for sale. Typically, these conditions would lead to weakening prices, but today's housing market is unlike any other in recent history.
According to the S&P CoreLogic Case-Shiller National Home Price Index, prices in April rose 6.3% compared to the same month last year. This marks the second consecutive month that the national index jumped at least 1% over its previous all-time high.
Although this is a three-month moving average, it’s significant that these price gains occurred even as the average rate on a 30-year fixed mortgage increased sharply in April, from 6.9% to 7.5%, according to Mortgage News Daily.
"2024 is closely tracking the strong start observed last year, where March and April posted the largest rise seen prior to a slowdown in the summer and fall," said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a news release. "Heading into summer, the market is at an all-time high, once again testing its resilience against the historically more active time of the year."
The only potential sign of relief is that the annual and monthly gains on the price index are slowing slightly. March’s annual gain was 6.5%.
Still, this contributes to one of the least affordable housing markets in U.S. history for both homeownership and renting. The housing cost burden has reached a record high, according to a new report from Harvard’s Joint Center for Housing Studies.
Home prices are now 47% higher than they were in early 2020, with the median sale price now five times the median household income, according to the study.
For renters, even though rent growth is slowing due to a significant increase in new apartment units this year, prices are still 26% higher than they were in 2020 and rising in three out of every five markets.
Half of all renter households—more than 22 million—spent more than 30% of their income on housing, which is considered "cost burdened" by the HJCH. Twelve million of those households spend more than half their income on rent.
For homeowners, 20 million are considered cost burdened by their monthly payments.
All of these cost-burdened levels represent records.
Homeowners are also facing a sharp increase in insurance premiums, up an average of 21% between 2022 and 2023, according to the HJCH report, and property taxes are also rising.
