US Economy: American Home Prices Surge In Record Numbers

U.S. home prices surged to a record in April with buyers concentrated on suburban areas.

Home prices have risen by 14.6% year-over-year nationally in April, the sharpest gain in over 30 years. The Commerce Department has said that the median price of a new home in April has risen to $372,400, a 20% increase in the past year. The median sale price of an existing home has gone up 19%, according to the National Association of Realtors.

Home prices are 34.9% above their peak in 2006.

Historically low mortgage rates have been caused by the pandemic thus increasing the buying power of Americans looking for a home. Bloomberg News noted how mortgage rates for a 30-year loan have dropped to 2.97%.

With a high demand in suburban markets, prices are jumping to record highs. Cities such as Phoenix, San Diego, and Seattle have seen increases of over 20%. Other cities such as Charlotte, Cleveland, Denver, and Dallas are also seeing record price gains.

Mortgage rates are currently 50% lower than what they were in 2005.

There have been concerns for months that home prices are moving too quickly.

“After robust gains over the past five years, the nationwide nominal house price index is now 40% above its 2012 low-point and 4% above the peak reached in 2006. If 2006 was a historic bubble, then current price levels should be looked at more closely,” according to J.P. Morgan Research.