In the third quarter of the year, 93 percent of the largest markets posted price upticks, according to the latest National Association of REALTORS® quarterly report, released this week. For a detached existing home, the median national price was $280,200, an increase of 5.1 percent year-over-year.
Fifty-three percent, or 96, of the 178 largest markets had home prices rise upwards of 5 percent, with double-digit increases in 10, including Montgomery, Ala., and Spokane-Spokane Valley, Wash. (both 12.6 percent), and Salt Lake City, Utah (12 percent). In pockets in the West, prices retreated, including San Jose-Sunnyvale-Santa Clara, Calif., (-4.6 percent), San Francisco-Oakland-Hayward, Calif. (-2.5 percent), and San Diego-Carlsbad, Calif. (-0.8 percent).
According to Lawrence Yun, chief economist at NAR, appreciation is overall strengthening, boosted by low mortgage rates. (More: Kudos, Low Rates: Homeownership Rises)
“Incremental price increases are to be expected, but the housing market has been seeing reacceleration in home prices as more buyers want to take on lower interest rates in the midst of insufficient supply,” says Yun.
“Unfortunately, income and wages are not rising as fast and will make it difficult to buy once rates rise,” however, he says.
Despite increases nationwide, affordability improved in the third quarter of the year, the report shows—another byproduct of low rates. The average monthly mortgage payment slid to $1,033, accounting for 15.6 percent of a family’s income (the median nationally was $79,215), down from 16.5 percent in Q2 2019 and 17.4 percent in Q3 2018.
For first-time homebuyers, their average monthly mortgage payment sunk, as well, to $1,019, assuming a 10 percent down payment. Their affordability improved markedly, from having to have $50,976 in income to make a purchase in Q2 2019, to getting by with $48,912 in income in Q3 2019.
“It is promising that first-time buyers needed a lower level of income to afford a mortgage payment,” says Yun.
According to Yun, a critical issue remains: the inventory shortage. In the third quarter, there were 2.7 percent fewer for-sale homes on the market year-over-year, at an average 4.1-months’ supply—a dip from 4.3 months in Q3 2018.
“In some markets, yes, we’re seeing construction companies ramp up plans to build more houses,” says Yun, “but in an overall comparison of 2019 and 2018, fewer homes have been built. So, hopefully home builders will expand their plans in order to better address the national inventory shortage.”
According to the report, the costliest markets in Q3 were:
San Jose-Sunnyvale-Santa Clara, Calif. – $1,240,000
San Francisco-Oakland-Hayward, Calif. – $964,000
Anaheim-Santa Ana-Irvine, Calif. – $826,000
Urban Honolulu, Hawaii – $813,500
Los Angeles-Long Beach-Glendale. Calif. – $649,600
The least pricey were:
Cumberland, Md.-W.Va. – $105,300
Youngstown-Warren-Boardman, Ohio-Pa. – $106,800
Decatur, Ill. – $107,900
Elmira, N.Y. – $115,200
Peoria, Ill. – $123,600.
For more information, please visit www.nar.realtor.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at firstname.lastname@example.org.