By Kerry Smith
Year-to-year, the median sale price of an existing U.S. home rose 22.9% in the second quarter – to $357,900. Prices were up in 99% of markets and up double-digits in 94%.
WASHINGTON – Continued low inventory and record-low mortgage rates spurred housing demand, causing median sales prices for existing single-family homes to increase in all but one of the 183 markets measured by the National Association of Realtors® (NAR) in the second quarter of 2021.
NAR’s latest quarterly report finds that 94% of those 183 metro areas also experienced double-digit price increases (89% in the first quarter of 2021).
In 2Q, the median sales price of single-family existing homes rose 22.9% to $357,900 – an increase of $66,800 from one year earlier. The four regions tracked independently with the study also saw double-digit year-over-year price growth, led by the Northeast (21.8%) and followed by the South (21.0%), West (20.9%) and Midwest (17.1%).
“Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year – but are unlikely to be repeated in 2022,” says Lawrence Yun, NAR chief economist. There are signs of more supply reaching the market and some tapering of demand,” he adds. “The housing market looks to move from ‘super-hot’ to ‘warm’ with markedly slower price gains.”
However, any slowdown isn’t reflected in 2Q numbers, and 12 metro areas reported price gains greater than 30% year-to-year: eight in the South and West regions, with three of them in Florida:
- Pittsfield, Mass. (46.5%)
- Austin-Round Rock, Texas (45.1%)
- Naples-Immokalee-Marco Island, Fla. (41.9%)
- Boise City-Nampa, Idaho (41%)
- Barnstable, Mass. (37.8%); Boulder, Colo. (37.7%)
- Bridgeport-Stamford-Norwalk, Conn. (37.1%)
- Cape Coral-Fort Myers, Fla. (35.6%)
- Tucson, Ariz. (32.6%)
- New York-Jersey City-White Plains, N.Y.-N.J. (32.5%)
- San Francisco-Oakland-Hayward, Calif. (31.9%)
- Punta Gorda, Fla. (30.8%)
Yun notes that home prices are increasing sharply in the San Francisco and New York metro areas.
Over the past three years, the typical price gain on an existing single-family home totaled $89,900; in 46 out of 182 markets, homeowners typically experienced price gains over $100,000. The largest price gains were in San Francisco-Oakland-Hayward, Calif. ($315,000); San Jose-Sunnyvale-Sta. Clara, Calif. ($294,000); Anaheim-Sta. Ana Irvine, Calif. ($279,500); Barnstable, Mass. ($220,600); and Boise-City-Nampa, Idaho ($206,300).
The rising prices mean homeowners, on average, pay more each month. The monthly mortgage payment on an existing single-family home financed with a 30-year fixed-rate loan and 20% down payment rose to $1,215 – an increase of $196 year-to-year – even as the effective 30-year fixed mortgage rate decreased to 3.05% from 2Q 2019’s 3.29%.
Among all homebuyers, the monthly mortgage payment as a share of the median family income rose to 16.5% in 2Q 2021 compared to 14.0% one year ago.
“Housing affordability for first-time buyers is weakening,” Yun says. “Unfortunately, the benefits of historically-low interest rates are overwhelmed by home prices rising too fast, thereby requiring a higher income in order to become a homeowner.”
Among first-time buyers, the mortgage payment on a 10% down payment loan jumped to 25% of income (21.2% one year ago). A mortgage is affordable if the payment amounts to no more than 25% of the family’s income.
In 17 metro areas, a family needed more than $100,000 to affordably pay a 10% down payment mortgage compared to 14 metro areas in 2021 Q1. Six are in California, but one – Naples-Immokalee-Marco Island – is in Florida. The rest are generally in key cities located in various states.
There were only 84 metro area markets in which a family needed less than $50,000 to afford a home, down from 104 markets in 2021 Q1. The most affordable markets – where a family can typically afford to buy a home financed with a 10% down payment with an income of $25,000 or less – are in Rust Belt areas.
“Housing supply will be critical in moderating the growing housing costs and rising rents,” Yun says. “Any disincentive to produce more housing inventory, such as extending the eviction moratorium, will only worsen the current shortage.”
Yun says NAR requested “expeditious release” of rental subsidy funds in order to assist those who may be facing eviction.
© 2021 Florida Realtors®
