Houses Cost More in June Than Any Time in the Past Three Decades

Home for sale with red and white real estate sign during the fall season.
LifestyleVisuals / Getty Images/iStockphoto

It seems U.S. prices in 2022 can’t avoid comparisons to the 1980s. Overall inflation is running at its highest level since 1981, and the cost of buying a home has reached its highest point since 1989, according to a new report from the National Association of Realtors.

See Our List: 100 Most Influential Money Experts
Explore: 7 Surprisingly Easy Ways To Reach Your Retirement Goals

NAR’s housing-affordability index, released last week, fell to 98.5 in June 2022 — its lowest level since June 1989, when the index was 98.3. The index weighs several different factors, including family incomes, mortgage rates and sales prices, to come up with home affordability, The Wall Street Journal reported.

The reason homes have become so expensive in recent months is that prices have continued to skyrocket at the same time that mortgage rates are pushing higher. A separate report from NAR, also released last week, found that the median price of a single-family existing home hit $413,500 during the second quarter, up 14.2% from the previous year. That marked the first time ever that the price eclipsed $400,000.

Eighty percent of U.S. metro markets — 148 out of 185 — saw double-digit price increases during Q2. That was up from 70% the previous quarter. Housing affordability “significantly declined” as the monthly mortgage payment on a typical existing single-family home with a 20% down payment surged by nearly one-third from the previous quarter and by half from the previous year.

Building Wealth

“Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers,” NAR Chief Economist Lawrence Yun said in a press release.

But there could be good news on the horizon for home buyers. Existing-home sales have now declined for five straight months, meaning buyers have less competition for available inventory. Meanwhile, in early August the 30-year fixed-rate mortgage fell to an average of 4.99% from a June peak of 5.81%, NBC News reported, citing data from Freddie Mac.

The 30-year fixed rate did rise back up to 5.22% last week, Forbes reported, but was still down 59 basis points from June’s peak. Rates could fall to as low as 4.5% by the end of 2022, Bank of America said in a recent note.

Live Richer Podcast: First-Time Homebuying During Inflation — Is It Worth It?
Discover: Here’s What Everyone Should Be Doing To Fight Inflation, According to the Top Money Experts

“Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief,” Yun said. “The recent dips in mortgage rates will bring additional buyers to market, especially in those places where home prices are still relatively affordable and where jobs are being added.”

Building Wealth

More From GOBankingRates

Share This Article:

Building Wealth

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
Learn More

Best Bank Accounts for September 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.