Report: Prices for the Most Affordable U.S. Homes Rose 9% in June
Prices for the most affordable third of homes sold in June in the U.S. were up 8.7% annually, according to a new report from technology-powered real estate brokerage Redfin. The firm notes it was the second largest increase in more than a year. Prices grew just 1.1% for the most expensive third of homes in that same time period.
Price growth for the most affordable group of homes has not dropped below 4.5% in the last seven years, according to Redfin. For the most expensive homes, supply has steadily risen on a year-over-year basis since the middle of 2013. Supply in the most affordable tier has been dropping since 2012.
Overall, market conditions have recently improved for home buyers. Home prices were up 3.4% in June, compared to the as much as 9% price increases seen in early 2018, according to Redfin. Mortgage interest rates are also lower than they have been in nearly two years.
“Now that the economic expansion is in its 10th year, some working- and middle-class Americans are finally starting to see wage increases significant enough to ready them to buy their first homes,” said Redfin chief economist Daryl Fairweather. “But, economic growth is a double-edged sword for the housing market. The increase in demand for low- and moderately-priced starter homes is pushing up prices for the most affordable segment of the market. Over the next few years, prices for the most affordable homes are likely to continue growing rapidly, pushing homeownership further out of reach for people with lower incomes.”
There were only three metros in Redfin’s analysis where home prices in the most affordable segment fell in June. Those were San Jose, where prices dropped 3.8% annually to an average of $731,688; Orange County, where prices dropped 2.6% annually to an average of $449,390; and in Memphis, where prices dropped 6.6% annually to an average of $78,808.
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