The cost of buying a home has hit an all-time high

It is more expensive than ever to buy a home in the U.S., according to a new report from the real estate company Redfin.

The median home price hit a record $383,725 during the four-week period ending April 21. That’s up 5.2 percent from a year ago, Redfin found, one of the largest leaps in home prices since October 2022.

The average 30-year fixed mortgage rate hit 7.1 percent this week, the highest it’s been since November 2023. Mortgage rates dipped briefly at the end of last year after the Federal Reserve signaled it would cut interest rates this year, but they have steadily climbed as strong economic data has extended the timeline for those initial rate cuts.

The median monthly housing payment also jumped to a record $2,843, up 13 percent from the same period last year.

Chen Zhao, the economic research lead at Redfin, said prospective buyers should “accept that this year is probably not the time to find a dream deal.”

“Price growth may cool slightly in the coming months if mortgage rates stay high or rates might fall slightly — but overall housing costs are likely to remain elevated for the foreseeable future,” Zhao said.

The Fed is not expected to start cutting interest rates until September, according to the CME Fedwatch Tool, which means borrowing costs including mortgage rates will likely remain elevated for some time.

Shelter costs are one of the indexes driving stubbornly sticky inflation, accounting for more than 60 percent of annual “core” inflation, according to the latest consumer price index (CPI). While inflation fell to 3.5 percent year over year in March from its 9 percent peak in June 2022, the central bank is not confident it is on a smooth path to its 2 percent goal and is expected to hold interest rates at the current range of 5.25 percent to 5.5 percent when it meets next week.

To get around high prices and borrowing costs, the rate of all-cash home buys is at a near-record high, a recent Redfin report found. More than 1 in 3 homes were purchased with cash in February, and the median down payment jumped to $55,640, up 24.1 percent from the year before.

But most buyers can’t afford to make an all-cash offer or offer a larger down payment, which Zhao previously said is “creating a reality where in many places, wealthy Americans are the only ones who can afford to buy homes.”

Low housing supply has also contributed to soaring home prices. While Redfin recently reported that a near-record number of apartments are under construction, which will eventually bring down housing prices, there’s still high demand for a lower number of houses.

“My advice to sellers is to price your home fairly. Even though sellers are getting top dollar at the moment, they should price competitively to attract buyers from the start and avoid having to drop their price as stubbornly high mortgage rates eat into buying budgets,” Zhao said.