In a climate of rising mortgage rates and home sales slipping, the number of markets experiencing double-digit annual price gains is up. According to the National Association of Realtors’ (NAR’s) latest quarterly report, 80% of the 185 metros they track posted double-digit price increases (up from 70% in the previous quarter).
The national median single-family existing-home price rose 14.2% annually to $413,500, marking the first time in history it has exceeded $400,000.
This sounds like good news for homeowners, but with would-be homebuyers are edged out of the market threatens the sector. Affordability continues to be a plague that is holding back the housing market.
NAR points out that the monthly mortgage payment on a typical single-family home (with a 20% down payment) surged by 50% from a year ago and nearly 30% from the first quarter of this year. Families typically spent 24.3% of their income on mortgage payments, up from 18.7% the prior quarter and 16.9% one year ago.
“Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers,” said NAR Chief Economist, Dr. Lawrence Yun.
“Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief,” Dr. Yun added. “The recent dips in mortgage rates will bring additional buyers to market, especially in those places where home prices are still relatively affordable and where jobs are being added.”
The South experienced the largest price increases of 18.2% for the second quarter and accounted for 2 out of every 5 sales in that period. Home prices jumped 9.7% in the Midwest, 10.1% in the Northeast, and 12.7% in the West.
“The local job market performance and supply availability are the clear distinguishing factors driving local home price growth,” Dr. Yun noted. “Job growth is positive and should be applauded, but supply restraints are creating unnecessary barriers to ownership opportunities.”