US Home Prices Hits New Record as Housing Affordability Worsens

US-ECONOMY-INDICATOR-REAL-ESTATE — (Photo : (Photo by STEFANI REYNOLDS/AFP via Getty Images)) A sign is displayed in front of a new housing development in Burke, Virginia, on April 26, 2022. - Sales of new homes fell in the US last month, government data said on April 26, as high prices continued to crimp demand. Sales dropped to an annualized rate of 763,000, seasonally adjusted, less than analysts anticipated and 8.6 percent below the rate in February, which was revised sharply upwards, the Commerce Department reported.

The cost of buying a home in the United States has hit another record, worsening the country's housing affordability crisis.

The median US home sale price in June soared to $397,954, marking a new all-time high. That is also 4.9% higher than the home sale price recorded in the same period last year and is also the biggest annual increase recorded since March, according to the latest findings from Redfin.

The median asking price for homes also increased to $409,975 in June, marking a 6.1% year-over-year increase. It is also the biggest gain reported since October 2022.

Furthermore, the median monthly mortgage payment for loans with a 6.86% rate was $2,749 in June---a 6.5% increase year-over-year. That being said, it is $88 below a previous record set during the four weeks ending April 28.

Where Did Home Prices Increase the Most

The median sale price of homes had the biggest year-over-year increases in Anaheim, CA (14.7%), Newark, NJ (13.5%), Nassau County, NY (12.6%), New Brunswick, NJ (11.7%) and Fort Lauderdale, FL (11.1%), the report noted.

In contrast, only three metro areas posted declines in home prices, including Austin, TX (-2.1%), Dallas, TX (-1.5%), and San Antonio, TX (-0.2%).

The increase in home prices comes as more buyers are being priced out of the housing markets due to the affordability crisis. A separate report from Zillow found that hopeful home buyers would need to put in a 35.4% down payment or $127,750 to comfortably afford monthly mortgage payments. In the report, "comfortably affordable" means homeowners would not need to exceed more than 30% of their typical income on housing costs.

The recent increases in housing prices are caused by a number of factors. For instance, years of underbuilding have led to an inventory shortage in the housing market. This was exacerbated by a rise in the cost of construction materials and a rapid rise in mortgage rates that, as of the week ending July 3, settled at 6.95% for the 30-year fixed loan.