August 7, 2019
Home prices in the second quarter continued to rise in the majority of housing markets across the country. Ninety-one percent of 178 metros tracked saw home price gains in the second quarter, according to the latest report from the National Association of REALTORS®, released Wednesday.
The national median existing single-family home price was $279,600 in the second quarter, up 4.3% from a year ago. Ninety-three of the 178 metros tracked saw price growth of 5% or more. Ten metro areas posted double-digit increases, mostly in more modestly priced markets like Boise City-Nampa, Idaho; Abilene, Texas; Columbia, Mo.; Burlington-South Burlington, Vt.; and Atlantic City-Hammonton, N.J.
Tight inventory conditions, particularly at lower price points, are prompting home prices to accelerate in several markets, notes Lawrence Yun, NAR’s chief economist.
“Housing unaffordability will hinder sales irrespective of the local job market conditions,” Yun says. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”
Home Sales Should Improve But …
In high-priced metro areas where the median home prices were $500,000 and higher, the single-family median prices fell when compared to a year ago, according to NAR. For example, the most costly area, San Jose-Sunnyvale-Santa Clara, Calif., posted a 5.3% drop. San Francisco-Oakland-Hayward, Calif., saw a 1.9% decrease in prices.
Yun says home sales should be higher, but he is cautioning that greater economic uncertainty could hinder business.
“The exceptionally low mortgage rates will help with housing affordability over the short run,” Yun says. “But if the low interest rates are due to weakening economic confidence, as reflected from a correction in the stock market, then the low rates will not help with job growth and will eventually hinder home buying and home construction.”
Housing affordability is declining, despite recent progress in wages, NAR’s report notes. National family median incomes rose to $78,366 in the second quarter. However, greater home price growth contributed to an overall decrease in affordability compared to the last quarter. For instance, a home buyer making a 5% down payment would need an income of $62,192 to purchase a single-family home at the national median price, while a 10% down payment would require an income of $58,918, and $52,372 would be required for a 20% down payment.
“Copyright National Association of REALTORS®. Reprinted with permission.”