The American dream of homeownership continues to get more expensive. Buyers are paying more for single-family existing houses, according to the latest quarterly report from the National Association of Realtors, with home sales prices climbing in about 70% or 152 of 221 metro areas in this year’s first quarter. About one in 14 markets or 7% posted double-digit annual price appreciation of 18% in the prior quarter.
But because of previously higher prices, the median single-family existing-home price now declined 0.2% to $371,200, from a year ago. The higher interest rates have made the monthly mortgage payment go up to $1,859, which represents a 33.1% increase from a year ago, when buyers put down 20% of the selling price
With 46% of the rising prices, the South experienced the top jump in the first quarter. Price appreciation from year-over-year also rose 1.4%. Prices also rose in the Midwest by 2.9%. They went down in the Northeast and West, however, with declines of 0.1% and 5.3%, respectively. Lawrence Yun, NAR’s Chief Economist, attributes these results to the rising mortgage rates. “Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater mortgage rate sensitivity for high-priced homes,” he said.
Expensive cities experienced bigger declines with San Francisco, San Jose and Reno seeing drops of at least 10% from a year ago. In contrast, prices rose that same percentage in affordable cities such as Milwaukee, Dayton and Oklahoma City.
Another finding in the NAR report is that home prices declined where they had previously gone up rapidly, according to Yun. “For example, home prices grew an astonishing 67% in three years in Boise City and Austin through 2022. The latest price reductions in these areas have improved housing affordability and led to some buyers returning given the sustained, rapid job creation in their respective markets,” he said. Year-over-year prices in the first quarter declined by 13.5% in Austin and 10.3% in Boise.
Another significant development is the return of multiple offers, which many pundits thought had disappeared or lessened as the pandemic waned and prices seemed to stabilize or drop. The reason is the continued housing shortage. “Due to the intense housing inventory shortage, multiple offers are returning, especially on affordable homes, Price declines could be short-lived,” Yun said.
Proof of that shortage is found in numbers and comparisons in inventory supply. According to the report, inventory in the first quarter averaged 1.63 million listings at any given time, a 40% reduction from the first quarter of 2019, a year before COVID-19 appeared.
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