Home values reach new heights, but disparity in home equity persists among various demographics
As the real estate market continues to evolve, homeowners and buyers alike are navigating a landscape shaped by several significant trends. Here's a closer look at the notable developments in home equity, mortgage rates, and real estate as of June 2022.
Home Equity Trends
Homeowners are enjoying record gains in home equity, thanks to rising home prices. The median home price nationally reached an all-time high of $435,300 in June, fueling wealth growth for many homeowners. Over the last five years, average homeowner wealth has increased substantially, reflecting continued appreciation despite some slowing in sales.
Mortgage Rates and Market Impact
Elevated mortgage rates remain a significant factor limiting buyer demand and slowing home sales. Despite more listings and some inventory increase, higher mortgage costs are cooling buyer activity, leading to a market where many buyers face affordability challenges.
Real Estate Sales and Pricing
- Existing home sales slowed by about 2.7%-3% in June 2022, matching a historically sluggish pace seen previously, with regional differences—the Northeast saw sharper declines, while the West had slight gains.
- Prices continued to rise but at a slowing growth rate. For instance, starter home prices were up 3.1% year over year but price growth has decelerated for six consecutive months, partially due to increased inventory (around 19% more listings for starter homes).
- New home sales were roughly flat, with median new build prices down slightly, as builders offer discounts to attract first-time buyers. About half of new homes sold were priced over $400,000, but more inventory is appearing in the $300,000 to $400,000 range as affordability efforts continue.
- Increased inventory in certain segments, especially starter homes, improved buyer choice and reduced competition, beneficial for first-time buyers, although overall sales remain subdued.
Other Developments
- The average rate on a $30,000 home equity loan has decreased three basis points to 8.25%, while the average rate on a $30,000 home equity line of credit (HELOC) has decreased one basis point to 8.26%.
- Ultra-low interest rates from previous years are deterring homeowners from selling their homes, as 54% of homeowners declare there's no mortgage rate at which they would be comfortable with selling their home this year, according to the 2025 Mortgage Rates Sentiment Survey.
- Similarly, 51% of homeowners wouldn't buy a new place this year even if mortgage rates dropped significantly, according to the same survey.
- Low inventory and elevated mortgage rates are making it hard for buyers, especially first-time buyers.
- Black and Hispanic homeowners face disproportionate barriers in building an equity stake.
In summary, as of June 2022, homeowners are benefiting from rising equity due to record-high home prices, but higher mortgage rates and affordability challenges are tempering sales growth, especially for existing homes. Inventory growth in starter and mid-price segments is helping ease competition slightly, though regional variations and price pressures persist. The market is cautiously shifting toward more buyer opportunities but remains influenced strongly by mortgage rate levels and economic conditions.
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- Home equity growth is being driven by record-high home prices, with the median price in June 2022 at an all-time high of $435,300, leading to significant wealth growth for many homeowners.
- Despite the increase in listings, higher mortgage rates remain a significant factor limiting buyer demand and slowing home sales, causing affordability challenges for many potential home buyers.
- To combat these challenges, finance experts recommend educating oneself on financial management, lifestyle adjustments, and self-development to navigate the current housing market and make informed decisions about education, home purchasing, and personal finance.
