WASHINGTON (February 12, 2020) – The vast majority of metro areas saw price gains and very small increases in inventory in the final quarter of 2019, according to the latest quarterly report by the National Association of Realtors®.
Median single-family home prices increased year-over-year in 94% of measured markets in the fourth quarter, with 170 of 180 metropolitan statistical areas1 showing sales price gains. That is up from the 93% share in the third quarter of 2019. The national median existing single-family home price in the fourth quarter was $274,900, up 6.6% from the fourth quarter of 2018 ($258,000).
“It is challenging – especially for those potential buyers – where we have a good economy, low interest rates and a soaring stock market, yet are finding very few homes available for sale,” said Lawrence Yun, NAR chief economist. “We saw prices increase during every quarter of 2019 above wage growth.”
At the end of last quarter, 1.40 million existing homes were available for sale,2 8.5% less than total inventory at the end of 2018’s fourth quarter. Average supply during the fourth quarter of 2019 was 3.5 months – down from 4.0 months in the fourth quarter of 2018.
Eighteen metro areas witnessed double-digit price growth last quarter, including Trenton, N.J. (18.2%), Boise City-Nampa, Idaho (13.7%), Gulfport-Biloxi, Miss. (11.8%), Kingston, N.Y. (11.2%) and Albuquerque, N.M. (11.1%). Some of the increases are due to the changes in the type of home that were sold during the quarter.
“Rising home values typically create wealth gains for existing homeowners as shown in NAR’s latest study, however, areas that are deemed ‘too expensive’ will obviously have trouble attracting residents and companies looking to do business there,” Yun said. “We need a good balance that benefits both current and future homeowners, but right now, the balance is still in favor of home sellers.”
Prices continue to rise even in America’s most expensive metro areas. Of the top 10 most costly metros, only San Jose saw a year-over-year decline in single-family sales price ($1.246 million; -0.3%). Other high-priced areas include San Francisco, Calif. ($990,000; 3.9%); Anaheim-Santa Ana, Calif. ($828,000; 3.6%); Urban Honolulu, Hawaii ($812,600; 0%); San Diego, Calif. ($655,000; 4.6%); Boulder, Colo. ($630,400; 6.4%); Los Angeles-Long Beach, Calif. ($617,300, 7.2%); Seattle-Tacoma, Wash. ($528,800;8%); Nassau County, N.Y. ($496,600; 3.7%); and Boston-Cambridge, Mass. ($482,800; 4.9%).
Affordability Improvements Since Last Quarter
Despite rising home prices, falling mortgage rates in 2019 made it more affordable for a family to manage monthly mortgage payments, enticing many first-time buyers. The 30-year fixed-rate averaged 3.76% in 2019 Q4, down from 4.95% one year ago. Because of the lower mortgage payment, the income needed for a family to afford a mortgage3 decreased to $48,960 from $52,896 one year ago.
The actual 2019 Q4 median family income increased to $79,740 from $77,093 one year ago. When viewed as a share of the estimated national median family income of $79,7404, a family spent 15.3% of income on mortgage – compared to 17.2% one year ago.
With this, first-time homebuyer affordability improved as well. The starter median home price in 2019 Q4 fell to $233,800, while the monthly mortgage payment decreased to $1,006, assuming a 10% down payment. First-time home buyers needed a lower level of income to afford a mortgage payment, at $48,288, compared to the qualifying income in the third quarter of 2019 ($48,864).
In the most expensive metro area of San Jose, a family would need an income of $223,900 to afford a 30-year fixed mortgage at a 20% down payment. The qualifying income rises to $265,800 on a 5% down payment loan. In the top 10 most expensive metro areas, a family would need to make more than $100,000 to afford a mortgage payment on a median-priced home with a 5% down payment on a 30-year fixed-rate mortgage.
The 6.6% increase in single-family sales prices represented a faster pace compared to the 5.1% mark in 2019 Q3. Compared to the same quarter one year ago, median prices rose at the fastest pace in the West (7.3%), followed by the Midwest (6.8%), South (6.1%) and Northeast (5.8%).
Median home prices were highest in the West region at $413,500 and were the least expensive in the Midwest, at $210,200. At these prices, the minimum income needed to afford a median-priced home after a 20% down payment was $74,307 in the West, but only $37,773 in the Midwest.
The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases, the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.
Data tables for MSA home prices (single-family and condo) are posted at https://www.nar.realtor/research-and-statistics/housing-statistics/metropolitan-median-area-prices-and-affordability. If insufficient data is reported for an MSA in a particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.
1 Areas 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 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.
3 A mortgage is affordable if a family spends no more than 25% of its income on mortgage payments on a 30-year mortgage with a 20% down payment (the qualifying income).
4 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%.