In the United States, home prices rose 19% and in some markets it has risen even higher

In cities all across America, the average home price is rising. This includes places like Phoenix and Tampa, as well as Miami.

In the United States, home prices rose 19% and in some markets it has risen even higher

According to the most recent S&P CoreLogic Index, home prices in 20 major cities increased 19% in January compared to a year earlier. As COVID-19 loses its grip on U.S. real estate, residential property prices have continued to rise due to a shortage in homes and increased demand from buyers.

Experts warn that rising home prices and increasing rates of mortgage could drive millions of Americans off the market.

Rubela Farooqi (chief U.S. economist at High Frequency Economics) stated in a report that "home prices remain close to all time highs, which is impacting affordability." "Overall, the lack of supply is still a major headwind to home sales."

According to Case-Shiller data, Phoenix's home prices increased by 33% between January 2021 & January 2022. The state's average home price is more than $400,000. The average home price in Tampa, Florida rose by nearly 31% during that time, while Miami's prices rose by 28 percent. According to Zillow, the average home in Tampa now costs more than $375,000, while Miami homes cost $480,000.

According to Case-Shiller, other cities experiencing significant increases in home prices are San Diego, California (27%), Charlotte, North Carolina (24%), and Atlanta, Georgia (22%).

The rapid rise in home prices during the coronavirus epidemic has made the dream of homeownership more expensive than many middle-class Americans. They must compete with investors and buyers of higher income.

The Federal Reserve is beginning to raise its short-term interest rates. This means that home loans are becoming more expensive. According to Bankrate, the average rate for a 15 year mortgage has increased to 3.8% and 4.5% respectively for a 30-year mortgage. This means that monthly payments will be higher for a new house.

Analysts expect mortgage rates will continue to rise. Tan Kai Xian, a U.S. analyst at Gavekal Research, stated in a report that mortgage rates would rise as long-term Treasury yields continue to climb.

Mortgage rates are rising, so buyers are increasingly taking out adjustable rate mortgages, one of the financial products that is blamed for the housing crisis in 2006.

Economists believe that the reason why there are less houses on the market is because construction companies don't build homes as fast as they need to meet demand. According to government housing data, builders completed construction of nearly 3% less than February 2021.

According to Abbey Omodunbi, senior economist at PNC Financial Services Group, labor shortages and the increasing cost of building materials are also slowing down construction of new homes.


 

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