Why are home prices still so high?

Despite a $450,000 median, why are prices still surging in 2023? Discover the impact of limited inventory, strong buyer demand, and millennial trends.
Last updated on:
September 23, 2023

This week, the median price of single-family homes in the US came in at $450,000 – which is about the same as it was this time last year. (Source: Altos Research) Redlands (see pic) Median price $675k and 13 days on market.

Double line chart showing how many days and the average sell price properties in Redlands have been selling since 2019

So why are home prices still so high? Let’s take a closer look at the data. Typically by mid-May, we see inventory grow 15-20% from the start of the year. In 2023, it’s a different story. Available inventory has shrunk by 14%, and buyers are devouring the homes that hit the market. (Source: Altos Research) In fact, nearly 50% of homes that are selling are doing so within 2 weeks. (Source: Redfin) Limited homes for sale plus buyer resilience is why home prices are still high in the U.S.

In fact, as seen above, builders are 600k short of actual demand. They are not building enough homes and as indicated, it appears the trend is to build even less. Home prices will continue to reach new highs, partly because of the largest segment of the economy, Millennials (born 1981-1996), who now want a home of their own. There’s never a dull moment in the industry, and especially now – it’s a critical time to stay informed. We’re here if you need us. 🙌

Sincerely - Dave O'Hara

P.S. Considering buying or selling soon? In today’s market, you need a problem solver. Contact us and see how we can help you navigate your unique situation.

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