A heavy majority of metro markets saw home price gains in the third quarter of 2022, despite rising mortgage rates and declining sales, according to the National Association of Realtors' (NAR) latest quarterly report.
Single-family existing-home sales prices grew in nearly every measured metro area — 181 of 185, or 98%, — in the third quarter.
Out of those tracked metros, 46% registered double-digit price increases, down from 80% in the second quarter of this year.
The national median single-family existing-home price jumped 8.6% from a year ago to $398,500. Year-over-year price appreciation declined when compared to the previous quarter's 14.2% ($413,500).
"Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising," said NAR Chief Economist Lawrence Yun. "The median income needed to buy a typical home has risen to $88,300 — that's almost $40,000 more than it was prior to the start of the pandemic, back in 2019."
Among the major U.S. regions, the South registered the largest share of single-family existing-home sales at a whopping 44%. The South also showed the greatest year-over-year price appreciation in the third quarter at 11.9%. Prices elevated 8.2% in the Northeast, 7.4% in the West and 6.6% in the Midwest.
According to the report, Florida had seven out of 10 of the metro areas with the largest year-over-year price increases all recorded gains greater than 18%. However, California claimed half of the top 10 most expensive markets in the U.S., with the San Jose-Sunnyvale-Santa Clara market having an average house price of $1,688,000.
"The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building," Yun added. "The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise."
In the third quarter of 2022, stagnant home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840 — up nearly 50% from last year’s $614.
While seasoned buyers are feeling the effects of inflation, first-time buyers are facing growing unaffordability as they attempt to buy homes. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 — an increase of almost $600, or 49%, from one year ago.
