Home Prices Post Largest Year-Over-Year Increase Since November 2022

Redfin reported on Thursday (7-27-23) that during the four-week period ending on Sunday, July 23rd, the typical US home sold for approximately $382,000. This is up 2.6% year-over-year and is the largest increase recorded since November 2022.

Homebuyers are getting a bit of relief, Redfin notes, as mortgage rates have inched lower from the eight-month high recorded just a few weeks ago. The typical monthly payment is $2,599 at today’s average weekly rate. That is down $55 from the all-time high of $2,654 reported in early July.

Redfin says that home prices are increasing despite tepid demand. However, inventory has dropped more than demand as homeowners with lower mortgage rates remain in their homes, which in turn is sending prices higher. Redfin data show that new listings are down 22% year-over-year, and the total number of homes for sale is down 17%—the largest decline in approximately 18 months.

On a positive note, this week’s news that the Fed is no longer forecasting a broad economic recession is hopeful for the housing market, despite the increase in interest rates at their meeting this week. The Fed indicated that a soft landing is more likely than previously thought, which would mean interest rates went high enough to tame inflation but not enough to cause a surge in unemployment and send the economy into a recession.

Adding additional background and her analysis to the report, Redfin’s Economic Research Lead Chen Zhao said:

“This is hopeful news for the housing market in a few ways. Avoiding a recession means Americans will hold onto their jobs, for the most part, and feel more confident about purchasing big-ticket items like a house. Steady progress on taming inflation means that while mortgage rates will probably stay elevated for at least a few months, they’re likely to start coming down before the end of the year. That should encourage some sellers and buyers to jump into the market.”