According to Realtor.com, the median list price for the month crossed $300,000 for the first time, up 7.2 percent year over year.
The news is even worse for buyers in the lower price-point markets. The number of homes priced at $200,000 and below in March was down 9 percent when compared with last year.
Lawrence Yun, chief economist at the National Association of Realtors, told FOX Business that he expects to see bifurcation in the housing market this year, with stronger price appreciation for homes with lower price points – for which there is “very strong demand.”
“[These buyers] will be competing with other buyers trying to get that right home … [due] to a lack of inventory at that price point,” Yun said.
A construction worker shortage, which has continued to worsen, is exacerbating the inventory crunch, Robert Dietz, chief economist for the National Association of Homebuilders, told FOX Business. Throughout the spring, Dietz expects affordability to continue to decline, particularly in markets where local regulatory rules will constrain builders’ ability to add inventory.
On the flip side, Lawrence expects there will be little upside movement on prices for houses occupying the luxury-end of the spectrum, where there are too many sellers.
Inventory of higher-end homes (priced $750,000 and higher) rose 11 percent year over year, according to Realtor.com.
Adding to motivations for sales in the higher-end market are recent changes to state and local tax deductions, which were capped at $10,000 under the Tax Cuts and Jobs Act. Yun said people may be accelerating plans to unload properties in high-tax states like New York or Connecticut as a result of the changes.
But as the spring buying season gets under way, potential homebuyers are getting a boost from low mortgage rates – which are near their lowest level in about 10 years. Low rates have led to a surge in refinance activity and purchase mortgage application demand – signaling Americans’ desire to enter the market.