The second quarter of 2023 brought mixed signals to the U.S. housing market, with almost 60% of metro areas (128 out of 221) posting home price gains, according to the National Association of Realtors’ latest quarterly report. This came in a quarter where 30-year fixed mortgage rates fluctuated between 6.28% and 6.71%.
While the South saw the largest share of single-family existing-home sales, the national median single-family existing-home price declined by 2.4% to $402,600, compared to a year ago. Mortgage payments on a typical existing single-family home with a 20% down payment grew to $2,051, marking an increase of 11.6% from the previous year.
NAR Chief Economist Lawrence Yun attributed the dip in home sales to higher mortgage rates and limited inventory. “Affordability challenges are easing due to moderating and - in some cases - falling home prices, while the number of jobs and incomes are increasing,” he said.
Regional variations played a significant role, with prices in the South falling 2.2%, while the Northeast and Midwest posted gains of 3.2% and 1.4% respectively. The West saw a significant retreat of 5.8% in prices.
Yun also noted the unusual phenomenon of price declines in some of the fastest job-creating markets, such as Austin and San Francisco, and suggested that prices in these areas might be adjusting after years of dramatic increases.
Housing affordability worsened during the second quarter due to rising home prices and mortgage rates. The situation particularly impacted first-time buyers, with the monthly mortgage payment for a typical starter home reaching $2,012, up 9.9% from the previous quarter.
The report also revealed that a family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 40.3% of markets, an increase of 33% from the prior quarter.
Despite the challenges, the report also highlighted significant growth in several metro areas, with six of the top 10 markets registering at least 10.4% gains in the Midwest. Seven of the top 10 most expensive markets were in California, with San Jose-Sunnyvale-Santa Clara topping the list at $1,800,000.
Overall, the second quarter provided a complex picture of the housing market, with gains in numerous metro areas contrasted by declines in others, and a continued trend of rising mortgage payments. The findings point to a market in flux, influenced by economic factors and regional variations, but with underlying signs of resilience and potential for recovery.
