Home prices were on the rise in the second quarter in most of the nation’s major metros. According to the latest quarterly report from the National Association of Realtors, median single-family home prices increased year over year in 96% of measured markets, with 174 of 181 metropolitan statistical areas seeing sales price gains.
This is the same percentage of metro areas that saw price gains in the first quarter. The national median existing single-family home price in the second quarter was $291,300, a year-over-year increase of 4.2%. However, the appreciation slowed compared with the first quarter, which had a pre-pandemic rate of 7.7%.
“Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale,” said Lawrence Yun, NAR chief economist. “Historically low inventory continues to reinforce and even increase prices in some areas.”
Yun added that the nation’s record-low mortgage rates will continue to draw in new buyers, but that more inventory is needed. “Unless an increasing number of new homes are constructed, some buyers could miss out on the opportunity to purchase a home or have the opportunity delayed,” he said. “In the meantime, prices show no sign of decreasing.”
Out of the 181 metro areas, 15 saw double-digit price growth, including Huntsville, Ala. (13.5%); Memphis, Tenn. (13.4%); Boise, Idaho (12.6%); Spokane-Spokane Valley, Wash. (11.8%); Indianapolis (10.8%); and Phoenix (10.2%).
Several California cities continued to be ranked as the most expensive metros, with San Jose maintaining its place at the top of the list during the second quarter and showing year-over-year price gains ($1.38 million, 3.8%). San Francisco was second with an unchanged price of $1.05 million, followed by Anaheim ($859,000, 2.9%); Urban Honolulu ($815,700, 3.8%); and San Diego ($670,000, 2.3%).
On the other end of the spectrum, about a third of the metro areas have median home prices under $200,000, including Topeka, Kan. ($147,800); Springfield, Ill. ($153,800); Shreveport, La. ($162,300); Cleveland ($177,300); and Columbia, S.C. ($199,100).
“This last quarter showed heavy buyer activity in less occupied areas when compared to highly populated cities such as San Francisco, New York, and Washington, D.C., related in part to the longer shutdowns in these cities,” said Yun. “In the midst of the pandemic, some buyers are looking for housing in less crowded and more affordable metros.”
The effective 30-year fixed mortgage rate averaged 3.29% in the second quarter, down from 4.08% a year ago and 3.57% in the first quarter. According to the NAR, the monthly mortgage payment on a typical home purchase financed with a 30-year fixed-rate mortgage and a 20% downpayment increased to $1,019 compared with $995 in the first quarter. But it’s still lower than $1,078 seen a year ago.
“Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago,” said Yun.
