Home prices hit a record high in May even as home sales fell. High interest rates are keeping many would-be buyers and sellers on the sidelines.Home prices jumped to a record high last month, according to data out this week. Elevated mortgage rates kept many would-be buyers and sellers on the sidelines — and the lack of homes for sale is driving up prices for homes that are on the market.
A key reason is the elevated mortgage rates across the country. They have made it more expensive to buy a house, pushing some would-be buyers out of the market. In addition, many people who already own homes are reluctant to sell, since that would mean giving up their current, cheaper mortgage. "At lower price points, people are being priced out of the home-buying market, and there's just less inventory when we think about homes that are under $250,000," says Jessica Lautz, deputy chief economist for the Realtors association.There is some good news: Interest rates have fallen slightly in recent weeks. The average rate on a 30-year mortgage this week was 6.87%,Still, rates are more than twice as high as they were before the pandemic.