Median price of homes sold in the US rose to $393,500 in March: Will prices continue to rise in 2024?

In June 2023, the median price of an existing home sold in the United States reached the highest recorded price: on record $410,100. When accounting for new and existing homes sold, the highest median price was observed in the summer of 2022 when it hit $479,000.

However, as the Federal Reserve moved to impose rate hikes steadily throughout 2022 and 2023 to combat inflation, prices began to fall. In part, the reduction in home prices was caused by rate hikes that led mortgage rates to surge.

The Fed’s decision to increase rates has contributed to a supply issue in the housing market, whereby potential sellers, knowing that their new mortgage would likely have a significantly higher rate tacked onto it, stay put, limiting the number of homes for sale at a given time. The National Association of Realtors’ chief economist, Lawrence Yun, explained that affordable homes receive multiple offers in this market, highlighting that there is still considerable demand even with high prices. However, since there “is just not enough supply of these affordable homes,” prices remain elevated.

Housing sector has been a main driver of inflation

The Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) report for March earlier this month and found that housing and gasoline had been the primary drivers of the 0.4 percent average increase in prices tracked by the agency. This comes after the BLS recorded an increase of 0.4 in February and 0.3 percent in January. “The index for shelter rose in March, as did the index for gasoline,” reads the report. These two commodities “contributed over half of the monthly increase in the index for all items.” Thanks to data from the National Association of Realtors, we can see how much home prices changed in March and how those changes break down regionally.