Home prices are on the rise. Has the market turned a corner?
Mortgage rates are inching upward, and consumers are worried about the state of the economy as the war in Iran continues to drive up prices for everything from food to gas.
But the U.S. housing market is heating up, according to a report released Tuesday by the National Association of Realtors.
Existing-home sales increased 3.2% from April to May, hitting the highest level since December, the report shows.
The median home price was $429,300 last month, up 1.3% from a year prior, the report found.
However, the national gain masked sharp regional differences. Sales rose year-over-year in the Midwest, the South and the West, but fell in the Northeast.
“More Americans are on the move,” the Realtors association’s chief economist, Lawrence Yun, said in a statement. “This is great news for the housing market and the economy.”
‘Improving affordability’
Mortgage rates are ticking up but remain lower than a year ago and are near the long-term historical average, Yun said. He also noted that, in most of the country, income gains are outpacing increases in home prices.
“Improving affordability is helping drive this momentum,” Yun said.
Higher home sales can also ripple through the economy, he added, as they lift demand for lawn care, furniture, moving services and financial services.
Other economists paint a less sunny picture.
The May gain is “probably a false dawn,” Oliver Allen, senior economist at Pantheon Macroeconomics, wrote in a note shared with Straight Arrow. Allen said Tuesday’s report shows only that sales have moved back toward recent levels, not that the housing market has turned a corner.
“This combination of more ample supply and tepid demand,” Allen wrote, “suggests that existing home prices are going nowhere fast.”
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Ella Rae Greene, Editor In Chief
