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Existing home prices rose 3.7% in May to $183,600 as existing home sales set new records with prospective buyers entering the market in reaction to rising mortgage rates. While home prices have generally trended lower since the middle of 2003, they have rebounded slightly in recent months and inched past the previous record of $181,600 in July 2003. Prices are currently 10.3% higher than a year ago and have been exceeding the 14-year average of 4.8% since early 2001.
Over the past month, the median price increased in all four regions ranging from a low of 0.4% in the Northeast to a high of 6.1% in the Midwest. The Midwest continues to offer the lowest median priced home in the nation at $152,700, which is partly the result of its slow price appreciation in recent years. In contrast, the median home price in the West is the highest at $257,900, up 12.3% from a year ago. Home prices in the Northeast have been growing the fastest at over 18%; reaching a median price of $213,200 in May. Annual price gains in the South reached 9.4% last month with the median home price coming in at $168,500.
Mortgage rates have climbed for nine consecutive weeks in anticipation of an interest rate hike by the Feds due to increased inflationary pressures and accelerating economic and job growth. Going into the second half of the year, mortgage rates should continue its upward march, but at a more modest pace, dampening price appreciation. But relatively low inventories and strong demand will continue to exert upward pressure on home prices.
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