There’s an imbalance in the housing market, and it’s driving prices higher. In most parts of the country, home prices and rents are rising, leaving many potential buyers in a housing quandary.
Homeowners have been slow to put their properties up for sale, causing prices to grow faster than supply. Existing-home sales increased 4.7% year over year, according to the report released on Monday by the National Association of Realtors®. As of February, the median home price had risen 7.5%, to $202,600, from February 2014, marking the 36th consecutive month of price gains.
While higher prices may be good for homeowners, they’re less so for prospective buyers. Nearly 38% of home shoppers say their No. 1 impediment to purchasing has been their inability to find a house that fits their budget, according to daily surveys of buyer traffic at realtor.com®. Still, first-time buyers accounted for 29% of February buyers, according to NAR. That’s the first increase since November 2014.
“Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise,” said Lawrence Yun, NAR’s chief economist.
The Federal Reserve has indicated that interest rates will probably go up this summer. Buyers trying to lock in in the last days of historically low rates should expect more bidding wars, higher prices, and greater frustration.
The cold weather in the Northeast and Midwest hasn’t helped. February home sales dropped 6.5% in the Northeast and stayed flat in the Midwest, according to NAR. In other parts of the country, however, sales of existing homes were up—5.7% in the West and 1.9% in the South. (The South actually led the country in annual home sales, up 8.5% from a year ago.)