The total net worth of American homes hit a record $27.8 trillion, according to the Federal Reserve.
The Fed report showed an increase of almost 20% in the first quarter of 2022, the Wall Street Journal reported.
The rise is a byproduct of a scorching housing market. Data from real estate analytics firm CoreLogic said nationwide home prices rose 20.9% year-on-year in April, while no state saw a year-over-year decline in home prices. houses.
According to the Zillow Home Value Index, which analyzes homes in the middle price range, the average home value in the United States is currently just under $350,000.
Freddie Mac, the federal housing mortgage company, blames soaring house prices on low mortgage rates, limited supply and increased migration south and west.
The results echo the views of Patrick Dodd, President and CEO of CoreLogic.
“Record home price growth is the result of a scarcity of inventory for sale coupled with buyers eager to buy before mortgage rates rise,” Dodd said in a June 7 statement.
Equity gains are expected to drive a record amount of home improvement spending this year, according to CoreLogic.
Soaring house prices and soaring inflation rates have discouraged homeowners from using their equity. Meanwhile, it bolstered the finances of existing homeowners, The Wall Street Journal said.
With annual inflation in May hitting a record 8.6%, the Federal Reserve raised its benchmark rate by 0.75 percentage points on June 15, its largest increase since 1994, in an effort to calm inflation. persistent.
This would consequently increase mortgage rates and should therefore cool buyer demand.
“With much higher 30-year fixed mortgage rates now, we expect to see buyer activity decline due to eroding affordability. As a result, our forecast calls for slower price growth over the coming year,” Dodd said.