Metro Home Prices Rise in 93% of Metro Areas in Third Quarter of 2019

SAN FRANCISCO (November 7, 2019) – An overwhelming majority of metro areas experienced price gains with very limited inventory growth in the third quarter of 2019, according to the latest quarterly report by the National Association of Realtors®.

Single-family median home prices increased year-over-year in 93% of measured markets in the third quarter, with 166 of 178 metropolitan statistical areas1 showing sales price gains. That is up from the 91% share in the second quarter of 2019. The national median existing single-family home price in the third quarter was $280,200, up 5.1% from the third quarter of 2018 ($266,500).

“Incremental price increases are to be expected, but the housing market has been seeing reacceleration in home prices as more buyers want to take on lower interest rates in the midst of insufficient supply,” said Lawrence Yun, NAR chief economist. “Unfortunately, income and wages are not rising as fast and will make it difficult to buy once rates rise.”

Ninety-six out of 178 metro markets under study have price growth of 5% or higher. Ten metro areas experienced double-digit increases, including Montgomery, Ala. (12.6%); Spokane-Spokane Valley, Wash. (12.6%); and Salt Lake City, Utah (12%).

Yun, who has repeatedly called for more homes to be built, said some areas may finally receive at least moderate relief on that front. “In some markets, yes, we’re seeing construction companies ramp up plans to build more houses,” Yun said. “But in an overall comparison of 2019 and 2018, fewer homes have been built. So hopefully home builders will expand their plans in order to better address the national inventory shortage.”

The metro areas where single-family median home prices declined included the high-cost areas of San Jose-Sunnyvale-Santa Clara, Calif., (-4.6%), San Francisco-Oakland-Hayward, Calif., (-2.5%) and San Diego-Carlsbad, Calif., (-0.8%).

The five most expensive housing markets in the second quarter were the San Jose-Sunnyvale-Santa Clara, Calif., metro area, where the median existing single-family price was $1,240,000; San Francisco-Oakland-Hayward, Calif., $964,000; Anaheim-Santa Ana-Irvine, Calif., $826,000; Urban Honolulu, Hawaii $813,500: and Los Angeles-Long Beach-Glendale. Calif., $649,600. San Diego-Carlsbad, Calif., came in sixth at $645,000. 

The five lowest-cost metro areas in the second quarter were Cumberland, Md.-W.VA, $105,300; Youngstown-Warren-Boardman, Ohio-Pa., $106,800; Decatur, Ill., $107,900; Elmira, N.Y., $115,200; and Peoria, Ill., $123,600.

Second Quarter Affordability Improves

Even as prices rose, home affordability improved in 2019 Q3 compared to 2019 Q2 as a result of historically low mortgage rates. The national median price for single-family homes rose to $280,200 during the third quarter of 2019, but average monthly mortgage payments fell to $1,033. When viewed as a share of the estimated national median family income of $79,2152, monthly mortgage payments fell to 15.6% (16.5% last quarter and 17.4% one year ago).

First-time homebuyer affordability improved as well. The starter median home price in 2019 Q3 rose to $238,200, but the monthly mortgage payment decreased to $1,019, assuming a 10% down payment. First-time home buyers needed a lower level of income to afford a mortgage payment, at $48,912, compared to the qualifying income in the second quarter of 2019 ($50,976). “It is promising that first-time buyers needed a lower level of income to afford a mortgage payment,” Yun said.

In the most expensive metro areas in the West, San Jose home buyers would need an income of $221,185 to buy a home, while buyers in San Francisco would need $171,954; this assumes a 20% down payment on a median-priced home, ensuring mortgage payments are equivalent to no more than 25% of income.

At the end of 2019’s third quarter, 1.83 million existing homes were available for sale3,which is 2.7% less than the total inventory at the end of 2018’s third quarter. Average supply during the third quarter of 2019 was 4.1 months – down from 4.3 months in the third quarter of 2018.

The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/List4.txt.

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.

The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single-family, townhomes, condominiums and co-operative housing.

2 Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on down payment percentages and assume 25% of gross income devoted to mortgage principal and interest at a mortgage interest rate of 3.9%.

3 Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).

Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.

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