Median Home Price Up 16% From Last Year: How Does That Affect The Real Estate Market?

The U.S. median home sale price has reached $361,225, a 16% year-over-year increase, according to new data from Redfin Corp RDFN.

In an analysis of housing activity spanning more than 400 metro areas for the four-week period ending Aug. 22, Redfin reported asking prices of newly listed homes were up 10% year-over-year to a median of $351,730, which is down 2.7% from the peak set in the four-week period ending June 27. It is also the lowest level since mid-April.

Pending sales were down 6% from their 2021 peak during the four-week period ending May 30 while new listings of homes for sale were only up by 1% from one year earlier. Homes that sold were on the market for a median of 18 days, up from the all-time low of 15 days in late June and July and down from 34 days during the same period last year.

Redfin also noted that 52% of homes sold above list price, up from 32% one year earlier. This measure has been falling since the four-week period ending July 11 when it peaked at 55%.

"Demand for homes is making a comeback because even though home prices are high and competition is still steep, homebuyers don't have many alternatives but to keep trying," said Redfin Chief Economist Daryl Fairweather. "This continued demand for homes is enticing more homeowners to sell in order to avoid the fear of missing out on historically high prices. This enthusiasm from both buyers and sellers is translating into continued growth in pending sales compared to last year."

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What Else Happened: Despite the increase in median home prices, a new data study by Realtor.com determined that it was cheaper to buy a starter home than to rent a similar-sized unit in 24 of the 50 largest metro markets.

The top markets where starter home purchases were more cost-effective included Birmingham (33.1% lower), St. Louis (29.4% lower), Pittsburgh (27.7% lower), Orlando (25.9% lower) and Cleveland (25.7% lower).

Realtor.com added that July’s average rent was up 9.8% over last year and 12.2% since 2019, with two bedroom-units at $1,802 (+10.9%), one-bedrooms at $1,495 (+9.5%) and studios at $1,315 (+5.6%).

"Rents hit new highs in 40 of the 50 largest U.S. metros this July and grew at an almost double-digit pace — the fastest yearly rate we've seen in the last 18 months," said Realtor.com Chief Economist Danielle Hale. "Sky-high rents and historically low-interest rates have made the monthly cost to buy a starter home lower than renting one in nearly half the markets across the U.S."

Realtor.com is operated Move, a subsidiary of News Corp NWSA NWS.

Photo: Max Pixel.