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- Amid rising mortgage rates and a decline in home sales, more metro areas – 70% of 185 – recorded a double-digit annual increase in their median single-family existing-home sales price.
- The median sales price of single-family existing homes rose at a faster pace of 15.7%, to $368,200 (14.3% in the previous quarter).
- With sustained price appreciation and higher mortgage rates, affordability worsened in the first quarter; monthly mortgage payments rose on a typical existing single-family home with a 20% down payment.
Rising mortgage rates and a decline in home sales have done little to cool sales price gains. The median sales price of single-family existing homes hit $368,200 in the first quarter, according to a new report released today by the National Association of Realtors.
That represents a 15.7% increase year over year, up from 14.3% in the fourth quarter of 2021. The Realtors said that, with sustained price appreciation and higher mortgage rates, affordability worsened in the first quarter.
A report released today by CoreLogic said home prices nationwide, including distressed sales, increased year over year by 20.9% in March 2022 compared with March 2021. The CoreLogic HPI Forecast indicates that home prices will increase on a month-over-month basis by 1.2% from March 2022 to April 2022 and on a year-over-year basis by 5.9% from March 2022 to March 2023.
According to the Realtors’ research, a first-time buyer could not afford to buy a typical home in the first quarter. The mortgage payment on a 10% down payment loan on a typical starter home valued at $313,000 rose to $1,363, an increase of $313 or 30% from a year ago. First-time buyers typically spent 28.4% of their family income on mortgage payments, the report states. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to over 25% of the family’s income.
A family needed at least $100,000 to afford a 10% down payment mortgage in 27 markets (up from just 20 markets in the previous quarter). However, a family needed less than $50,000 to afford a home in 63 markets (81 markets in the prior quarter).
Prices are spiking especially in parts of the country once thought affordable as people migrate. Three Florida metropolitan areas considered small or midsize (Punta Gorda, Ocala, and Lakeland-Winter Haven) saw increases over 30%. The Southern part of the U.S. was most active, with 45% of single-family existing-home sales in the first quarter and notched a double-digit price appreciation of 20.1%. Meanwhile, the Northeast saw a climb of 6.7%, the Midwest 8.5%, and the West 5.9%.
“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” said Lawrence Yun, NAR chief economist. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”
Yun notes his prediction is based on an expectation of further supply for the upcoming quarter, citing that the beginning of the first quarter registered a record-low amount of inventory. He also anticipates other changes.
“I expect more pullback in housing demand as mortgage rates take a heavier toll on affordability,” he added. “There are no indications that rates will ease anytime soon.”
The lion’s share of the United States saw price hikes with 70% of metro areas reporting increases.
The top 10 areas with the highest year-over-year price gains were made up of midsize and small markets, with half of the sites located in Florida. Those include Punta Gorda, Fla. (34.4%); Ocala, Fla. (33.8%); Ogden-Clearfield, Utah (30.8%); Lakeland-Winter Haven, Fla. (30.1%); Decatur, Ala. (28.9%); Tampa-St. Petersburg-Clearwater, Fla. (28.8%); Fort Collins, Colo. (28.4%); North Point-Bradenton-Sarasota, Fla. (28.0%); Myrtle Beach-Conway-North Myrtle Beach, N.C.-S.C. (28.0%); and Salt Lake City, Utah (27.9%).
“Traditionally, homes in these markets were viewed as relatively inexpensive, but with recent migration trends, prices have increased significantly,” Yun said. “As more families relocate to various areas, we may see some surprising markets on our top 10 list.
“Price gains in many smaller, tertiary cities are now outpacing those in the more expensive primary and secondary markets,” he continued. “This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home, making relocation to smaller markets possible.”