Q3 metro home prices increase across the board
In the third quarter, home sale prices went up in every market compared to the same period last year. The combination of record-low mortgage rates and shrinking inventory has caused median single-family home prices to grow in all 181 metropolitan areas tracked.
“Favorable mortgage rates will continue to bring fresh buyers to the market,” says Lawrence Yun, Nation Association of Realtors® (NAR’s) chief economist. “However, the affordability situation will not improve even with low interest rates because housing prices are increasing much too fast.”
While 2020’s second quarter numbers reflected double-digit price growth in 15 metro areas, Q3 numbers show double-digit growth in 117 areas—65% of measured metros.
The biggest gains in Q3 are as follows:
- Bridgeport, Conn.—up 27.3%
- Crestview, Fla.—up 27.1%
- Pittsfield, Mass—up 26.9%
- Kingston, N.Y—up 21.5%
- Atlantic City, N.J.—up 21.5%
- Boise, Idaho—up 20.6%
- Wilmington, N.C.—up20.6%
- Barnstable, Mass.—up 19.4%
- Memphis, Tenn.—up 19.1%
- Youngstown, Ohio—up 19.1%
Price gains across the regions
Nationwide, median existing single-family home prices increased 12.0% on a year-over-year basis, and all four major regions saw year-over-year double-digit price gains.
Q3 2020 median existing-single-family home prices:
- West: Up 13.7% from last year
- Northeast: Up 13.3% from last year
- South: Up 11.4% from last year
- Midwest: 11.1% from last year
These numbers show home prices growing four times as fast as median family income, which has increased by only 2.9%.
“In light of the pandemic, prices jumped in a number of metros that contain larger properties and open space—where families could find extra rooms, including areas for an at-home office,” says Yun.
Of America’s 10 most expensive metro areas, eight are located in the West and two in the East. These include the following:
- San Jose, Calif.,1.40 million
- San Francisco, Calif., $1.125 million
- Anaheim, Calif., $910,000
- Urban Honolulu, Hawaii, $866,200
- San Diego, Calif., $729,000
- Los Angeles, Calif., $708,900
- Boulder, Colo., $673,400
- Seattle, Wash., $617,700
- Bridgeport, Conn., $591, 400
- Boston, Mass., $588,100
Rising prices met with shrinking inventory
Meanwhile, inventory continues to decline. The end of the third quarter shows 1.47 million existing homes available for sale—19.2% lower than 2019’s Q3 total inventory numbers.
And with rising home prices comes a lack of affordability. Higher home prices have increased the monthly mortgage payments for typical existing single-family homes. For instance, a home financed with a 30-year fixed-rate mortgage and a 20% down payment increased from a monthly payment of $1,032 to $1,059 over the last year.
“As home prices increase both too quickly and too significantly, first-time buyers will increasingly face difficulty in coming up with a down payment,” says Yun. “Transforming raw land into developable lots and new supply are clearly needed to help tame the home price growth.”
Source: https://www.nar.realtor/newsroom/metro-home-prices-increase-in-all-areas-in-third-quarter-of-2020