Report: Home Prices Are up Nearly 25% Since This Time Last Year | Eastern NC Now

Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft .

    Home prices continue to reach record highs in the United States.

    The National Association of Realtors released data showing that average home prices in June 2021 reached $363,300 — a 23.4% increase over the average of $294,400 in June 2020, as well as the 112th consecutive month of year-over-year gains.

    The organization says:

• Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 1.4% from May to a seasonally adjusted annual rate of 5.86 million in June. Sales climbed year-over-year, up 22.9% from a year ago (4.77 million in June 2020).
• Total housing inventory at the end of June amounted to 1.25 million units, up 3.3% from May's inventory and down 18.8% from one year ago (1.54 million). Unsold inventory sits at a 2.6-month supply at the current sales pace, modestly up from May's 2.5-month supply but down from 3.9 months in June 2020.
• Properties typically remained on the market for 17 days in June, unchanged from May and down from 24 days in June 2020. Eighty-nine percent of homes sold in June 2021 were on the market for less than a month.

    NAR chief economist Lawrence Yun sees no signs of a serious fallout: "At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year. Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available."

    The Northeast saw year-over-year price increases of 23.6%; in the South, Midwest, and West, prices rose by 21.4%, 18.5%, and 17.6% respectively.

    At median costs of $507,000, homes in the West are generally the most expensive, followed by homes in the Northeast ($412,800), South ($311,600), and Midwest ($278,700).

    As the United States economy recovers from COVID-19 and the lockdown-induced recession, the Federal Reserve is targeting near-zero interest rates and buying $120 billion in assets each month — benchmarks intended to stimulate economic activity by increasing the supply of the dollar.

    The end goal of the Fed's current policy regime is to manipulate the "federal funds rate" — the interest rate at which private banks can make short-term loans to one another. Because the Fed is currently targeting a near-zero rate, other interest rates in the economy — including mortgage rates — are low as well. At least partially due to quantitative easing, it is less expensive for American home buyers to take out a loan and purchase a house, leading to an increase in the number of homes demanded and a subsequent increase in prices.

    Supply issues are a concern as well. Amid a rocky labor market recovery, the American housing market is short by up to one million workers. Meanwhile, construction of new long-term housing has steadily slowed over the past several decades such that demand exceeds supply by over five million homes.