Surging Demand and Scarce Supply Drive Home Prices to Record Highs

Home prices in the United States reached a new record high in May, rising 0.7% compared to April, according to the Black Knight Home Price Index. Despite high mortgage rates, home prices are accelerating each month, with a potential annual growth rate of 8.9%. The housing market, particularly in the Midwest and Northeast, has rebounded to pre-pandemic levels or set new highs. However, supply remains tight, with new listings down 25% from last year, leading to bidding wars and increased competition among buyers. Affordability is being impacted, as the median price of pre-owned homes in May was $396,100, and the monthly payment for a median-priced home is at a record high.