Housing prices hit another record high as affordability crisis deepens

foxbusiness.com:

ResiClub co-founder and editor-in-chief Lance Lambert discusses the U.S. housing affordability crisis on 'Making Money.'

The cost of buying a new house just hit a fresh record even as mortgage rates pulled back from a five-month high, according to a new report.

Findings from Redfin show the median U.S. home sale price soared to $387,600 during the four weeks ended May 19 – a 4% increase from a year earlier. The monthly mortgage payment at that price, when accounting for the 7.02% median interest rate for a 30-year mortgage, is now $2,854. That is roughly $20 shy of April's record thanks to a slight drop in mortgage rates.

«Elevated mortgage rates and high home prices have been keeping some buyers on the sidelines this spring,» said Lisa Sturtevant, Bright MLS chief economist. «First-time homebuyers are having the hardest time.»

MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU

A home for sale in Huntington, New York, on Aug. 5, 2020. (Photo by Thomas A. Ferrara/Newsday RM via Getty Images / Getty Images)

There are a number of driving forces behind the affordability crisis. 

Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.

Higher mortgage rates over the past three years have also created a «golden handcuff» effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.

WHY CAN'T YOU FIND A HOME FOR SALE?

Economists predict that mortgage rates will remain elevated for most of 2024 and that they will only begin to fall once