The cost of buying a house grew hit new record highs this month, making homeownership an even more daunting task for the typical American.

The median U.S. home sale price — what buyers actually paid for a property — reached $387,600 during the four weeks ending May 19, a 4% increase from a year ago, according to a new report from online real estate brokerage Redfin. The monthly mortgage payment at that price — factoring in the 7.02% U.S. median interest rate for a 30-year mortgage — is now $2,854, Redfin said. Mortgage rates are up slightly from 6.99% last week.

The nation’s median asking price — what sellers hope their property goes for — reached a record   $420,250, a 6.6% rise from a year ago. Redfin drew its data from tracking home sales activity from more than 400 metro areas between April 21 and May 18. 

As a result of high prices, pending home sales are down 4.2% from the year before the report states. The drop comes amid the spring homebuying season, a period when real estate activity tends to pick up. But as prices climb, the prospect of owning a home becomes a greater challenge for Americans, particularly first-time buyers, some of whom are opting to sit things out.

“[E]levated mortgage rates and high home prices have been keeping some buyers on the sidelines this spring,” Bright MLS Chief Economist Lisa Sturtevant told Redfin. “First-time homebuyers are having the hardest time.” 

Homebuying has become such an obstacle for Americans that the Biden administration has proposed  giving a separate $10,000 tax credit for current homeowners who sell their “starter home” in order to jump into a bigger house. 

Economists point to two main reasons for the relentless rise in home prices: continuously strong demand and a longstanding shortage of inventory. 

“More new listings have been coming onto the market, and that increased supply was expected to spur more homebuying activity,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement earlier this week. “However, the long-awaited inventory gains are coming at the same time that mortgage rates at 7% and record-high home prices are sidelining more and more buyers.”

Mortgages rates still too high

Higher mortgage rates have also had an impact on some current homeowners. Because many bought or refinanced their properties in the first years of the pandemic — when rates dropped below 3% — some are now wary of selling their homes because it likely means taking on a new mortgage at today’s elevated rates.

“Move-up buyers feel stuck because they’re ready for their next house, but it just doesn’t make financial sense to sell with current interest rates so high,” Sam Brinton, a Redfin real estate agent in Utah, said in a statement Thursday. 

To be sure, not all homeowners are staying put, Brinton said. Despite the high mortgage rates, some sellers are forging ahead because they have no choice, he said. 

“One of my clients is selling because of a family emergency, and another couple is selling because they had a baby and simply don’t have enough room,” Brinton said in his statement. “Buyers should take note that many of today’s sellers are motivated. If a home doesn’t have other offers on the table, offer under asking price and/or ask for concessions because many sellers are willing to negotiate.”