Explosive housing

While a residential home in Arlington, Virgina litteraly exploded in a dramatic fashion a few days ago so have house prices in the northeast of the US where the house was located. In the span of two and a half years median sales prices of houses in the US rose 49% from USD 322,600 in Q2 2020 to USD 479,500 in Q4 2022. House prices subsequently dropped 13% to USD 418,500 in Q2 2023 but have rebounded again since. That rebound is largely due to one region in the US were house prices seem to have exploded. In the Northeast house prices increased 24% from USD 744,500 in Q2 2023 to USD 922,600 in Q3 2023. We have tried to uncover what is driving this increase but haven’t found a conclusive answer yet. Our best guess is that the mix of house sales has changed substantially with larger and better located houses transacting more relative to smaller worse located houses, because it a 24% like-for-like increase seem unlikely.

Source: Federal Reserve Bank of St. Louis, December 2023.