Home prices rose in roughly 90% of metro areas in the fourth quarter of 2022, according to the National Association of Realtors (NAR) quarterly report. Although price increases have slowed of late, 18% of the areas studied experienced double-digit price increases, down from 46% of areas in Q3 of 2022.
The national media single-family existing home price rose 4.0% in the last year to $378,7000 and the monthly mortgage payment (with a 20% down payment) averaged $1,969, up 58% in the past year. During the past year, mortgage rates doubled to surpass 7%, also influencing the market.
“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” NAR Chief Economist, Dr. Lawrence Yun said, noting the increases have far surpassed wage increases and consumer price inflation of 15% and 14%, respectively, since 2019.
Dr. Yun also observed that although sales are likely to decrease, prices “are expected to remain stable in the vast majority of the markets due to extremely limited supply.”
He also noted that “there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”
While regional performance varied, Dr. Yun makes clear that some markets will actually see prices decline, “especially some of the more expensive parts of the country which have also seen weaker employment and higher instances of residents moving to other areas.”
NAR has spent years ringing the alarm bell of a shortage of housing units coming online, threatening affordability, especially for qualified would-be first time buyers edged out of the market. Their quarterly report revealed that this segment of the market typically spent nearly 40% of their family income ton mortgage payments (up from 37.8% in the previous quarter). This is troubling as “affordable” means a mortgage payment is under 25% of a household’s income.
