H
ome prices continue to rise, with the median price reaching a record high of $435,300 in June. This growth is driven by a prolonged seller's market, where home construction lags behind population growth, leading to undersupply and higher prices. As a result, sales have slowed down, falling 2.7% in June compared to last year.

    The National Association of REALTORS' chief economist, Lawrence Yun, attributes the record-high median price to homeowners' growing wealth. Over the past five years, the average homeowner's wealth has increased by $140,900. However, this growth also widens the wealth gap between owners and renters, with Yun projecting that homeowners' median net worth will reach $430,000 in 2025 compared to $10,000 for renters.

    The impact on affordability is significant, with rising prices and elevated mortgage rates making it difficult for buyers to enter the market. First-time homebuyers comprised only 30% of existing-home sales in June, below their 40% norm. Even with a slight increase in housing inventories over the past year, the shortage of properties for low- to middle-income buyers will continue to keep prices high.

    Mortgage rates are also a major factor holding back home sales, with the 30-year fixed-rate mortgage averaging in the mid-to-high 6% range. If rates were to drop to 6%, an additional 5.5 million households, including 1.6 million renters, would become eligible for homeownership.

    In the meantime, cash purchases are driving a significant portion of existing-home sales, with nearly 30% of transactions being all-cash deals in June. This trend is largely driven by repeat buyers using equity from previous home sales to finance their next purchase outright.