Published: March 15, 2023 | By: National Association of Realtors
WASHINGTON (November 10, 2022) – An overwhelming majority of metro markets saw home price gains in the third quarter of 2022 despite mortgage rates that approached 7% and declining sales, according to the National Association of Realtors®’ latest quarterly report. Forty-six percent of the 185 tracked metro areas registered double-digit price increases, down from 80% in the second quarter of this year.
The national median single-family existing-home price climbed 8.6% from a year ago to $398,500. Year-over-year price appreciation decelerated when compared to the previous quarter’s 14.2%.
“Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising,” said NAR Chief Economist Lawrence Yun. “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic, back in 2019.”
Among the major U.S. regions, the South registered the largest share of single-family existing-home sales (44%) and the greatest year-over-year price appreciation (11.9%) in the third quarter. Prices elevated 8.2% in the Northeast, 7.4% in the West, and 6.6% in the Midwest.1
The top 10 metro areas with the largest year-over-year price increases all recorded gains greater than 18%, with seven of those markets in Florida. Those include North Port-Sarasota- Bradenton, Fla. (23.8%); Lakeland-Winter Haven, Fla. (21.2%); Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. (21.1%); Panama City, Fla. (20.5%); Deltona-Daytona Beach-Ormond Beach, Fla. (19.6%); Port St. Lucie, Fla. (19.4%); Greenville- Anderson-Mauldin, S.C. (18.9%); Kingsport-Bristol-Bristol, Tenn.-Va. (18.8%); Tampa-St. Petersburg-Clearwater, Fla. (18.8%); and Ocala, Fla. (18.8%).
Half of the top 10 most expensive markets in the U.S. were in California, including San Jose-Sunnyvale-Santa Clara, Calif. ($1,688,000; 2.3%); San Francisco-Oakland-Hayward, Calif. ($1,300,000; -3.7%); Anaheim-Santa Ana-Irvine, Calif. ($1,200,000; 9.1%); Urban Honolulu, Hawaii ($1,127,400; 7.6%); San Diego-Carlsbad, Calif. ($900,000; 5.9%); Los Angeles-Long
Beach-Glendale, Calif. ($893,200; 3.8%); Boulder, Colo. ($826,900; 7.5%); Naples-Immokalee-Marco Island, Fla. ($746,600; 16.7%); Seattle-Tacoma-Bellevue, Wash. ($741,300; 4.6%); and Boston-Cambridge-Newton, Mass.-N.H. ($698,900; 6.2%).
“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun added. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”
In the third quarter of 2022, stubbornly high home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single- family home with a 20% down payment was $1,840. This represents a marginal increase from the second quarter of this year ($1,837), but a significant jump of $614 – or 50% – from one year ago. Families typically spent 25% of their income on mortgage payments, down from 25.3% in the prior quarter, but up from 17.2% one year ago.
“A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rates down to around 6%,” Yun said. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”
First-time buyers looking to purchase a typical home during the third quarter of 2022 continued to feel the impact of housing’s growing unaffordability. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 – nearly identical to the previous quarter ($1,807), but an increase of almost
$600, or 49%, from one year ago ($1,210). First-time buyers typically spent 37.8% of their family income on mortgage payments, up from 36.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.
A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 59 markets, up from 53 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 17 markets, down from 23 in the previous quarter.
The National Association of Realtors® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
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®.
NOTE: NAR releases quarterly median single-family price data for approximately 185 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.
Areas are generally metropolitan statistical areas as defined by the 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: https://www.census.gov/geographies/reference-files/time- series/demo/metro-micro/delineation-files.html ! .
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.
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.
Housing costs are burdensome if they take up more than 30% of income. The 25% share of mortgage payment to income considers the idea that homeowners have additional expenses, including mortgage insurance, home insurance, taxes, and expenses for property
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