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In addition to higher mortgage rates, home buyers also faced higher home prices in the second quarter: 60% of the nation’s 221 largest metro areas posted gains, according to a newly released report from the National Association of REALTORS®. The national median single-family home price was $402,600, but that marks a 2.4% decline from a year ago. Only 5% of markets saw a double-digit annual price appreciation in the second quarter, down from 7% in the previous quarter.
Higher home prices and mortgage rates have pressed on buyers’ budgets—along with historically low levels of inventory—which have prompted home sales to fall from last year’s brisk pace, says NAR Chief Economist Lawrence Yun. “Affordability challenges are easing due to moderating and, in some cases, falling home prices, while the number of jobs and incomes are increasing,” Yun says. However, “just like the weather, large local market variations exist despite the minor change in the national home price.”
Many markets posting the largest gains in the second quarter were located in the Midwest. The following chart shows the top 10 metro areas with the largest year-over-year price increases in the second quarter.
On the other hand, about two in five markets experienced home price declines in the second quarter, up from 31% in the first quarter, NAR’s report shows. At a metro level, home prices year-over-year dropped in the second quarter by some of the largest amounts in:
- Austin, Texas: down 19.1%
- San Francisco: down 11.3%
- Salt Lake City: down 9.6%
- Las Vegas: down 7.4%.
“Interestingly, price declines occurred in some of the fastest job-creating markets,” Yun says. “Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases. In fact, the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”
Housing Affordability Remains Pressing Issue
Housing affordability continued to be problematic for aspiring home buyers, with the monthly mortgage payment on an existing single-family home reaching $2,051 in the second quarter, up 11.6% from a year earlier, NAR’s report shows. The typical family spent 27% of their income on mortgage payments. That’s up from 25.3% one year ago.
The priciest housing markets in the nation in the second quarter were:
- San Jose-Sunnyvale-Santa Clara, Calif.: $1,800,000, down 5.3%
- San Francisco-Oakland-Hayward, Calif.: $1,335,000, down 11.3%
- Anaheim-Santa Ana-Irvine, Calif.: $1,250,000, down 3.8%
- Honolulu: $1,060,700, down 7.4%
- San Diego-Carlsbad, Calif.: $942,400, down 2.4%
- Salinas, Calif.: $915,600, up 0.6%
- Oxnard-Thousand Oaks-Ventura, Calif.: $904,900, down 2.7%
- San Luis Obispo-Paso Robles, Calif.: $890,900, down 3.2%
- Boulder, Colo.: $871,200, down 6.7%
- Naples-Immokalee-Marco Island, Fla.: $850,000, unchanged
