Home prices rose 2.4 times faster than inflation since 1960s, study finds.

If home prices increased at the same rate as inflation since 1963, the median price of a typical house in the U.S. would be $177,511, according to a new research report by Clever, a real estate data company.

In reality, the cost of a typical house in the U.S. is more than $400,000. The median price for a home in the U.S. is $412,778, according to Redfin data.

In 2023, homeowner equity totaled almost $32 trillion, more than twice the $15 trillion in 2006. Sellers of course can use this equity for a larger down payment to reduce monthly payments on their next home.

Builders Spending More - spending on residential construction increased 0.7% in February, and is up 6.3% for the year. The gain was led by a 1.4% monthly jump in single-family home building, which is now up 17.2% over the past year.

Mortgage rates have contributed to high costs, supply and demand have also affected the price growth of homes in the USA.

When demand for other consumer products comes up, or when it increases, it’s usually not too hard for people to scale up supply.

Houses take months to build. The average time to complete a newly built single-family home is about 9.6 months, according to the 2022 Survey of Construction conducted by the U.S. Census Bureau.

Zoning restrictions, along with prohibitive land costs, can also make it hard to even secure the opportunity to build a new home.

To increase housing supply, local policymakers would need to lower the barriers for builders by easing land-use and zoning regulations, which determine factors such as the maximum height of a building or the minimum size of a lot, C. Kirabo Jackson, an economist previously told CNBC.

The affordability crisis for homes in the U.S. is a primary issue for many Americans. In 2023, sales of existing homes fell 19% from the previous year, to an annual rate of 4.09 million units. According to the National Association of Realtors, it was the steepest drop in 28 years.

Fortunately for home buyers, the outlook is a bit brighter this year. The two biggest pain points for buyers - high mortgage rates and a shortage of homes for sale - have already begun to improve.

Tips for buyers

• Stay on top of new listings. Although inventory is improving, homes are still selling at a fairly brisk pace. Turnkey homes, in particular, often fly off the shelves.
• Find an agent who specializes in your market. Finding an agent who knows your market like the back of their hand is a must.
• There’s no reason to go it alone. You need an agent to negotiate and provide advice throughout the home-buying process.
• Get your financing ducks in a row. Most buyers take out a mortgage to purchase a home. Getting preapproved for a mortgage will show you what size loan you are eligible for, helping you focus your home search.
• Make your offer shine. There are several ways you can make a bid stand out in this market. One tactic is to make a higher down payment (think over 20%), which gives the seller greater reassurance that your mortgage will get approved.

Tips for sellers

• Don’t overvalue your home. If you price your home too high above its market value, your listing could draw little foot traffic.
• Work with a seasoned listing agent in your area who can help you pinpoint the right asking price. Look for agents who have firsthand knowledge of what prices lead to sales.
• Make a great first impression. Curb appeal goes a long way. A study by Michigan State University found that a well-landscaped exterior increases a home’s perceived value by 5% to 11%.
• Fresh paint throughout your home can also have a big impact. Select a neutral color to create a blank canvas that can help buyers envision themselves living there.
• Make sure to highlight these kinds of home improvements in your listing’s property description. And always get professional photographs for your listing - according to one study of the housing market in Chicago, listings with professional photos sell 32% faster than other homes.