The majority of metro areas saw home prices rise in the final quarter of 2019 as housing inventories remained constrained and buyer demand stayed high, according to the National Association of REALTORS®’ latest quarterly report.
Median single-family home prices rose annually in 94% of the markets NAR tracked in the fourth quarter, or 170 of 180 metro areas. The national median existing single-family home price was $274,900, a 6.6% increase from the fourth quarter of 2018, NAR reported.
“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,” says Lawrence Yun, NAR’s chief economist. “We saw prices increase during every quarter of 2019 above wage growth.”
Median home prices were highest in the Western region of the U.S., at $413,500. They were the least expensive in the Midwest, with a median of $210,200.
Eighteen metro areas posted double-digit price increases in the fourth quarter, led by 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%).
“Rising home values typically create wealth gains for existing homeowners … however, areas that are deemed ‘too expensive’ will obviously have trouble attracting residents and companies looking to do business there,” Yun says. “We need a good balance that benefits both current and future homeowners, but right now, the balance is still in favor of home sellers.”
Still, buyers are finding falling mortgage rates are helping somewhat in easing housing affordability woes lately. The 30-year fixed-rate mortgage averaged 3.76% in the fourth quarter, down from 4.95% a year ago. “Because of the lower mortgage payment, the income needed for a family to afford a mortgage decreased to $48,960 from $52,896 one year ago,” NAR noted in its study.
But housing shortages abound, which means buyers are having fewer choices of homes for sale. At the end of the fourth quarter of 2019, 1.4 million existing homes were available for sale. That is 8.5% less than a year prior, NAR reports.
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Ryan Christensen
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