Housing Industry Dilemma Index Growth of Median Home Prices
2018 by Laurie Northington in General
The furniture industry is driven by housing: new household formations, changes of residences of existing households, and replacement or upgraded furniture within existing residences. Unfortunately, critically low inventories and subsequent skyrocketing home prices and rental rates are locking out new home buyers and stymieing moves at a time when the economy is growing and employment is high. This is the third factoid in a series of four factoids detailing the crucial struggle facing the housing market and consequentially the furniture industry.
Home prices have increased dramatically since the bottom of the recession in 2009 – jumping 46.1 percent from 2009 to 2018. With a current median home price of $328,000 (2018 April YTD), prices are 34.1 percent above the pre-recession peak of $244,950 in 2007. Since 2010, home price increases are averaging 5 percent a year (CAGR). Paired with ballooning home prices, stricter lending polices are keeping many first-time buyers out of the market.
As inventory stays low, prices will continue to go up due to many builders turning away from starter and mid-priced home and choosing to build high-end homes with better profit margins.
Source: U.S. Census Bureau