The housing market is so tight that home prices are 44% higher than before the pandemic - Yahoo Finance

Investor purchases of American homes dropped 45.8% year over year last quarter, according to Redfin.Steve Pfost/ Getty Images

• The median home price in the US is around $419,000, or 44% higher than January 2020, Redfin data shows.

• The real estate group also said there are 39% fewer total homes for sale compared to pre-pandemic.

• Freddie Mac estimates that the US housing market faces a shortfall of about 3.8 million units of housing.

A home in the US today costs about 44% more than it did before the pandemic.

The median home price is now at $419,103, according to Redfin data, whereas in January 2020, it was at $290,264.

Low inventory, high mortgage rates, and a lack of current homeowners willing to move off cheaper borrowing costs are keeping the market historically unaffordable.

In fact, a separate Redfin report on Thursday showed that there are 39% fewer homes for sale now compared to before the pandemic, and the latest Freddie Mac estimates put the inventory shortfall at about 3.8 million housing units.

Meanwhile, mortgage rates are still hovering close to 7%, nearly double what they were two years ago when low rates powered a surge in home-buying.

High rates have provided "golden handcuffs" for current homeowners, as it's more attractive and affordable to stay put with cheaper borrowing costs rather than moving and taking on a more expensive mortgage rate.

And with Federal Reserve Chairman Jerome Powell signaling last week that more interest rate hikes are still on the table, mortgage rates may not come down much anytime soon.

Edward Seiler, the Mortgage Banker's Association's associate vice president for housing economics, told Insider in a recent interview that new home buyers are facing the least affordable market ever.

The group's Purchase Applications Payment Index, which measures borrower affordability conditions, reached a record high in June.

"For new home buyers, this is the worst situation since the end of the Great Recession," Seiler said. "Current homeowners that were lucky enough to get a 2.75% interest rate in 2022 are in a great position, but for new home buyers looking to buy a first home, or those looking to move to another home, it's a very daunting proposition."

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