U.S. Median Home Price Tops $416K in November, Midwest Only Area Where Sales Slumped

The sales of new homes are still high everywhere in the United States, except in the Midwest, and average home prices have skyrocketed as a result. People looking to enter the housing market can expect to spend more than $400,000 on a new home.

The COVID-19 pandemic has caused an increase in demand for newer and bigger homes, with people spending more time indoors. This increase in demand and low mortgage interest rates have driven up prices.

In November, the median sales price of a new home increased more than 14 percent compared to a year ago to total $416,900.

The increase in the number of people buying homes in November also increased in every part of the country except the Midwest, which saw a quarter drop in sales.

Although prices of houses have skyrocketed and lower interest rates have made buying a home more appealing, CNBC reported that nationwide household income hasn't kept up with the uptick in prices.

Over the past decade, the median price of a home has increased nearly 30 percent but incomes only increased about 11 percent. If you look even further back over the past 50 years, home prices have increased 118 percent since 1965, with income only increasing an estimated 15 percent, CNBC reported.

Reality Sign, Housing Market
The COVID-19 pandemic has caused an increase in demand for newer and bigger homes, with people spending more time indoors. Above, a realty sign in front of a for-sale home in Annapolis, Maryland, on July 6. Jim Watson/ AFP/Getty Images

Even with income increases not matching the speed of those in housing market prices, new home sales surged 53.2% in the West and were up 15.6% in the Northeast and 2.7% in the South in November.

Sales of previously occupied homes rose for a third straight month in November to a seasonally adjusted annual rate of 6.46 million units, the fastest pace since January, according to a report this week from the National Association of Realtors.

The November increase pushed the seasonally adjusted annual sales pace to 744,000 last month, the best showing since reaching 796,000 in April.

Extraordinarily low mortgage rates have intensified demand.

Freddie Mac reported Thursday that 30-year fixed rate mortgages averaged 3.05% this week, down from last week's 3.12%.

Mortgage rates are likely to move higher next year as the Federal Reserve phases out the monthly bond purchases it has been making since the pandemic hit nearly two years ago. The Fed has already signaled that it expects to start raising interest rates as early as next spring to check sharply rising inflation.

But interest rate increases are expected to be modest and the shift higher may actually intensify demand as Americans try to lock in rates before they head even higher.

"Anticipation of higher mortgage rates as the Fed tapers should be supportive of sales over coming months," predicted Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

The Associated Press contributed to this report.

Home Sale Sign
Even with income increases not matching the speed of those in housing market prices, new home sales surged 53.2% in the West and were up 15.6% in the Northeast and 2.7% in the South in November. Above, a homes sale sign is shown in front of a new home construction site in Northbrook, Illinois, on Wednesday, June 23. Nam Y. Huh/AP Photo