Nearly seven out of 10 metro markets registered home price gains in Q1 2023, despite mortgage rates still remaining at a high of 6.1% – 6.7%, according to a new report from the National Association of REALTORS® (NAR).
NAR’s latest metro area index for Q1 2023 found that 7% of the 221 tracked metro areas registered double-digit price increases, down from 18% in Q4 2022. Compared to a year ago, the report found that the national median single-family existing-home price decreased 0.2% to $371,200.
In addition, the report found that among the major regions, the South saw the largest share of single-family existing-home sales (46%), with year-over-year price appreciation of 1.4%. Prices grew 2.9% in the Midwest, but fell 0.1% in the Northeast and 5.3% in the West.
Key highlights:
- The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 11.7%, with three of those markets in Wisconsin and two in North Carolina.
- Those include Kingsport-Bristol-Bristol, Tennessee-Virginia (18.9%); Oshkosh-Neenah, Wisconsin (16.5%); Warner Robins, Georgia (16.2%); Burlington, North Carolina (14.7%); Elmira, New York (14.7%); Oklahoma City, Oklahoma (14.7%); Milwaukee-Waukesha-West Allis, Wisconsin (13.7%); Appleton, Wisconsin (12.4%); Hickory-Lenoir-Morganton, North Carolina (12.0%); and Santa Fe, New Mexico (11.7%).
- Seven of the top 10 most expensive markets were in California, including San Jose-Sunnyvale-Santa Clara, California ($1,618,400; -13.7%); Anaheim-Santa Ana-Irvine, California ($1,195,500; -5.1%); San Francisco-Oakland-Hayward, California ($1,192,600; -14.5%); Urban Honolulu, Hawaii ($1,029,000; -8.8%); San Diego-Carlsbad, California ($880,000; -2.8%); Salinas, California ($863,900; -6.8%); San Luis Obispo-Paso Robles, California ($850,200; -3.8%); Oxnard-Thousand Oaks-Ventura, California ($844,800; -5.6%); Boulder, Colorado ($836,900; -2.6%); and Naples-Immokalee-Marco Island, Florida ($777,000; 4.3%).
- Roughly three in 10 markets (31%; 68 of 221) experienced home price declines.
- Cities in the West—such as San Francisco, San Jose and Reno—saw home prices drop by at least 10% from a year ago. Conversely, prices rose by at least 10% from the previous year in Milwaukee, Dayton and Oklahoma City.
- YoY prices declined by 13.5% in Austin, 10.3% in Boise and 7.3% in Phoenix.
- Inventory averaged 1,630,000 listings, a 40% reduction from Q1 2019—a year before the onset of the COVID-19 pandemic.
- The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,859, a 5.5% decrease from Q4 2022 ($1,967), but a jump of 33.1% ($462) from one year ago. Families typically spent 24.5% of their income on mortgage payments, down from 26.2% last quarter, but up from 19.5% one year ago.
- For a typical starter home valued at $315,500 with a 10% down payment loan, the monthly mortgage payment fell to $1,825, down 5.4% from last quarter ($1,930), but an increase of almost $450 (32.5%) from one year ago ($1,377).
- First-time buyers typically spent 37% of their family income on mortgage payments, down from 39.5% in the previous quarter.
- A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 33% of markets, down from 38% last quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 10% of markets, up from 8.6% last quarter.
Major takeaway:
“Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater mortgage rate sensitivity for high-priced homes,” said NAR Chief Economist Lawrence Yun.
“Home prices are also lower in cities that previously experienced rapid price gains,” added 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.”
Yun concluded, “Due to the intense housing inventory shortage, multiple offers are returning, especially on affordable homes. Price declines could be short-lived.”
For the full report, click here.
