Working families are being priced out of homeownership as median home prices hit a record $434,100 and mortgage rates climb to their highest point in over a year—twin anchors dragging the American dream underwater.
Existing home sales fell 1.7% in July to a seasonally adjusted annual pace of 4.06 million units, according to the National Association of Realtors. That's barely above what economists expected and continues a three-year slump near the 4-million mark—a full 1.2 million units short of the historic norm of roughly 5.2 million. The housing market has been effectively frozen since 2022, when the Fed's rate-hiking campaign began. Last year, sales flatlined at a 30-year low.
The math is brutal for anyone trying to buy. Freddie Mac reported the benchmark 30-year fixed mortgage rate hit 6.69% last week—the fifth straight week of increases and the highest level in just over a year. At that rate on a median-priced home, a buyer is signing up for roughly $2,800 a month in principal and interest before property taxes and insurance. That's not a mortgage; that's a second job.
NAR chief economist Lawrence Yun acknowledged the obvious: "There's no doubt that the housing market would be thriving if average mortgage rates were to return near 6%." Instead, the Fed keeps rates elevated, and the people who pay the price are the ones who can least afford it.
First-time buyers made up just 29% of July sales, according to NAR—down from 33% in June and well below the historical norm of roughly 40%. The professional class and Wall Street buyers with cash still get in. The family saving for a down payment gets the door shut.
Inventory remains choked at 1.54 million unsold homes at the end of July—down 1.9% from June and well below the roughly 2 million that was typical before COVID. That translates to a 4.6-month supply. A balanced market is 5 to 6 months. Sellers aren't listing because they'd have to give up their own locked-in low rates. The result: supply stays tight, prices stay high, and the Fed's supposed cure just keeps the patient sick.
ABC News noted that mortgage rates have trended higher since the U.S. confrontation with Iran escalated, as surging oil prices stoked inflation expectations and pushed up long-term bond yields that lenders use to price loans. Another foreign entanglement, another cost passed down to the American homeowner.
The Northeast is getting hit hardest—prices there jumped 5.2% year-over-year, driven by inventory shortages.
The Fed told the country rate hikes would bring equilibrium. Instead, they've produced a market where nobody moves, nobody sells, and a generation of younger Americans rents indefinitely. The policy serves the bond market. It doesn't serve the family trying to build equity on a paycheck.
The open question: how long does Washington keep pretending this is working?
