RALEIGH – Housing costs are rising, as median home sale prices continue to rise in the Triangle and mortgage interest rates are reaching levels not seen since 2009.

Meanwhile, the latest jobs numbers from the Bureau of Labor Statistics shows that the number of jobs added in the construction industry has slowed, at a time when there still remains a significant housing shortage in the region and across the United States.

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What’s happening?

According to data obtained by WRAL TechWire from the Triangle Multiple Listing Service, TMLS, the median sale price of a home sold in April 2022 was $415,000 across the entire 16-county region.

That’s up from a median sale price of $329,900 in April 2021.

And the rise is even more dramatic in Durham and Wake Counties, the data show.

In Wake County, the median sale price in April 2022 was found to be $485,000, up $100,000 from the prior year.

And in Durham County, the median sale price rose to $426,000 in April 2022, up from $319,900 in April 2021.

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Fed raising interest rate, and mortgage rates up again

Earlier this week, the Federal Reserve raised interest rates by a half-percentage point, as many analysts had expected.  And while it may take a little while for the change in Fed policy to shift the mortgage market, the latest data from Freddie Mac shows that the average rate for a 30-year fixed-rate mortgage, a common mortgage product, is now 5.27%, up from 5.1% a week ago.

A year ago, the typical rate on a 30-year fixed mortgage was 2.96%, according to Freddie Mac.

To combat inflation, the Federal Reserve can use its “blunt set of tools,” said Dr. Gerald Cohen, the chief economist at the Kenan Institute in Chapel Hill on a virtual briefing on the state of the economy earlier on Friday.

And the housing market is one of the challenges that the Federal Reserve is seeking to impact in its use of such tools, including shifting the primary interest rate or beginning to sell mortgage-backed securities in a tactic known as quantitative tightening, said Cohen.

It’s a needle that the Fed is attempting to thread, said Cohen.

“By raising interest rates and selling mortgage-backed securities, the Fed is raising the cost of borrowing,” said Cohen.  “And thereby slowing the housing market.”

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Construction jobs slow, too

Despite an ongoing housing shortage across the country, and in the Triangle, the latest jobs numbers from the Bureau of Labor Statistics show a significant drop-off in the number of construction jobs added to the U.S. economy in April.

Cohen said only 2,000 construction jobs were added while in prior months that number had been closer to 20,000.

“This is an economy where there are housing shortages,” said Cohen.  But the Federal Reserve may knowingly cause “the most pain in sectors such as the housing market, in sectors such as the auto market,” said Cohen, when it chooses to raise interest rates, which then impact a borrower’s purchasing power.  “That’s the only thing they can really do to slow the economy,” said Cohen.

“In this case, raising rates is going to hurt the sectors of the economy that we need to keep going, but what they’re trying to do is tamp demand while helping supply continue to grow,” Cohen said.  “I think what the Fed is hoping is that the underlying demand is there, because of demographics and the housing shortage, will continue to push housing going forward, but perhaps will push demand slow enough that housing can keep pace.”

“Perhaps, construction will remain healthy, especially in areas where demand is quite strong, but it is one of our early warning indicators,” said Cohen.

Population, jobs, supply chain problems mean there is no end in sight for Triangle’s ‘extreme sellers market’