Single-family existing-home prices increased in nearly 60% of measured metro areas in the second quarter, according to the latest quarterly report from the National Association of Realtors (NAR). Five percent of the 221 tracked metro areas registered double-digit price increases over the same period, a sequential decrease from 7% in the first quarter.
“Home sales were down due to higher mortgage rates and limited inventory,” says NAR chief economist Lawrence Yun. “Affordability challenges are easing due to moderating and, in some cases, falling home prices, while the number of jobs and incomes are increasing.”
According to the NAR, the national median single-family existing-home price fell 2.4% year over year to $402,600 in the second quarter. Yun says despite the “minor change” in the national home price, changes varied more on a market-to-market basis.
The South experienced the largest share of existing-home sales in the second quarter (46%), with year-over-year price depreciation of 2.2%. Prices rose 3.2% in the Northeast and 1.4% in the Midwest, while prices fell by 5.8% in the West. On a metro level, prices fell on a year-over-year basis by 19.1% in Austin, Texas; 11.3% in San Francisco; 9.6% in Salt Lake City; and 7.4% in Las Vegas.
“Interestingly, price declines occurred in some of the fastest job-creating markets,” says Yun. “Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases. In fact, the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”
Prices in Fond du Lac, Wisconsin; New Bern, North Carolina; Duluth, Minnesota-Wisconsin; Davenport-Moline-Rock Island, Iowa-Illinois; Allentown-Bethlehem-Easton, Pennsylvania-New Jersey; Kingsport-Bristol, Tennessee-Virginia; Peoria, Illinois; Green Bay, Wisconsin; Trenton, New Jersey; and Cape Girardeau, Missouri-Illinois, all increased by at least 10.4% on a year-over-year basis. Seven of the 10 most expensive metro locations were in California in the second quarter.
According to the report, housing affordability worsened on a sequential basis due to rising home prices and mortgage rates. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $2,051, up 10% from the first quarter and 11.6% compared with the second quarter of 2022. Families spent approximately 27% of their income on mortgage payments, up from 25.3% a year ago.
The monthly mortgage payment for a starter home valued at $342,200 with a 10% down payment loan grew 9.9% sequentially to $2,012. First-time buyers typically spent 40.7% of their family income on mortgage payments, up from 37.1% in the prior quarter.
A family needed a qualifying income of at least $100,000 to afford a down payment mortgage in 40.3% of analyzed markets, an increase from 33% in the first quarter. Conversely, a family needed a qualifying income of less than $50,000 to afford a home in 6.3% markets, down from 10% in the first quarter.
