MICHEL MARTIN, HOST:
Home prices hit an all-time high last month. NPR's Laurel Wamsley covers personal finance and housing and is here with us now to talk us through what this means. Good morning, Laurel.
LAUREL WAMSLEY, BYLINE: Hey, Michel.
MARTIN: So anybody who's been in the market knows this - home prices were already high, and now they've hit a new record. Can you give us the - you know, the depressing details?
WAMSLEY: Yeah, that's right. The National Association of Realtors released the June sales figures for existing homes, and they were really notable for two things. One is these high prices. The median sales price for an existing home last month was $435,300. That's the highest ever and up nearly 50% from just five years ago. Given that, you know, you might think we're in a hot market. But, no, home sales in June were actually at a nine-month low.
MARTIN: So explain that. How can prices hit new records while the market is so slow?
WAMSLEY: Well, yeah, it's a tale of two kinds of buyers. Some people do have a lot of money to spend. Wages keep rising, and people who have the home to sell can use profits from these high prices to buy their next one. Here's Jessica Lautz, Deputy Chief Economist at the National Association of Realtors.
JESSICA LAUTZ: Today's housing market is really haves and have-nots. Those who have housing equity can make housing trades right now. Many of them are doing so, even with an all-cash purchase. They have the ability to interact with today's housing market, where first-time homebuyers are being shut out.
WAMSLEY: You can see this in the fact that it was the top of the market that was strongest last month. Homes priced over a million dollars saw sales increase the most, and that really is pulling up prices. You know, and then there's the rest of us. You know, some folks are biting the bullet and just paying a lot for a house after having saved for years or gotten help from family, but not many. And many more would love to buy a house right now, but they just can't afford it because another factor that's keeping some buyers out is the high mortgage rates.
MARTIN: OK, could you talk more about mortgage rates? What effect are they having on the market?
WAMSLEY: Yeah, a significant effect. I mean, rates are about 6.75% right now for a 30-year mortgage, which Lautz notes has been pretty level since January.
LAUTZ: But it is pricing out buyers, and we also know the lock-in effect is real. People who have lower-interest-rate mortgages are just not willing to make this move right now unless they have a lot of housing equity.
WAMSLEY: You know, there are significantly more homes for sale than there were a year ago, though inventory is still lower than it was pre-pandemic. For those who are trying to enter the market, buy their first home, these high rates on top of high prices mean they simply can't make the numbers work. They can add hundreds or thousands of dollars to a monthly payment. Though if mortgage rates did drop, as many people would like to see, that would create more demand and probably push home prices up even more.
MARTIN: Yeah, that sounds complicated. OK, so you were reminding us that these are existing homes we're talking about. Is the picture any different for new homes?
WAMSLEY: Well, interestingly, new homes used to be more expensive than old ones because they have all the new bells and whistles. But lately, the median prices are pretty similar. And in some places, new homes might be cheaper because of the incentives that homebuilders are able to offer. But as we look down the road, unfortunately, the same interest rates that are keeping mortgage rates elevated are making it more expensive to build new homes. Permits for new construction dropped to more than a two-year low, and that hit to supply isn't great for housing prices in the months and years ahead.
MARTIN: That is NPR's Laurel Wamsley. Laurel, thank you.
WAMSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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