Why this is a bad time to buy a car

(CNN) — It has rarely been as difficult to buy a new or used car in the United States as it is today, despite improving supply problems and inflation beginning to level off.

According to recent data from the Bureau of Labor Statistics (BLS), vehicle transaction prices—the price you end up paying after any dealer discounts or surcharges—have risen higher and higher. faster since 2020 than at any time in over 35 years.

Consumer price indices for both new and used cars – the average changes in the transaction price of vehicles over time – are much higher than they were four years ago, in 2019.

There is a light of hope. BLS data shows used car price inflation has cooled just as sharply since December 2022 as it rose in the months before. But used cars have a long way to go before approaching 2019 sales prices and new vehicle prices have yet to slow.

The median transaction price for a new car has risen nearly $12,000 in the past five years, according to data from the Edmunds.com automobile website. For used cars, the median transaction price is still nearly $9,000, higher than it was in February 2018.

“[Los precios están] going down a bit, but not as fast as you’d hope,” said Ivan Drury, director of insight at Edmunds.com. “If you look back, or if you’ve ever made a transaction in your life, all of these numbers are bad.”

Car buyers haven’t seen price hikes like this since the 1970s and 1980s. What makes the 2020s unique is how much car prices have risen in a short period of time. In the worst 12 months for the used car market, the index rose 45%. There has never been a 12-month period since the BLS began keeping records, in 1947, in which used car prices have inflated more.

Recent price trends have been similar in all regions of the United States, although starting prices may be higher in some areas than in others. Preferences for more expensive vehicles in some areas drive these regional differences, Drury said.

There is a large market for pickup trucks pick up and SUVs (acronym for Sports Utility Vehicle) in the South, he said, where BLS data shows new car transaction prices have risen the most since 1987.

The average price of a truck pick up large nationwide was $62,430, in 2022, according to Edmunds.com. The median price for midsize cars was just $31,381.

The road to more reasonable prices for new and used cars remains bumpy.

Consumer tastes have shifted toward pickup trucks pick up and larger, more expensive SUVs. New car buyers are being spoiled for choice, compared to the simpler models available a few years ago. Both trends drive up prices and incentivize manufacturers to produce more expensive vehicles. The used market continues to be affected by the decline in leasing operations and car rental companies, which compete with consumers for the same limited supply of vehicles of three to five years.

“There are some factors that are hindering the US market,” says Drury. “I don’t think they’re going away anytime soon.”