Realtors Top Economist Calls This ‘Astonishing’

WASHINGTON – (By Dale King, Realty News Report) – An “astonishing” thing happened in the U.S. housing market during the first quarter of this year, said the chief economist at the National Association of Realtors.

More than 90 percent of metro markets (205 out of 221, or 93 percent) posted home price increases, even as the 30-year fixed mortgage rate ranged from 6.60 to 6.94 percent, said Lawrence Yun, quoted in the NAR’s latest quarterly real estate report.

“Astonishingly, [that] home price growth [took place while] facing the highest mortgage rates in two decades,” he said. “In the current market, rising prices are the direct result of insufficient housing supply not meeting the full demand.”

And that situation may not improve soon. NAR measured the amount of new home construction and compared it to the number of newly employed workers in 146 metropolitan statistical areas to determine whether homebuilding has kept up with the steadily improving pace of job growth during the past three years. The findings show that construction activity for all housing types is underperforming in roughly two-thirds of measured metro areas.

The report shows the South recorded the largest share of single-family existing-home sales (46 percent) in the first quarter of 2024, reflecting year-over-year price appreciation of 3.3 percent. Prices also swelled 11 percent for homes in the Northeast, 7.4 percent in the Midwest and 7.3 percent in the West.

“The expensive markets in the West, where home prices declined last year, are roaring back,” Yun observed.

In many cases, the cost increases are not just nudges, he said. “Thirty percent of the 221 tracked metro areas (63 markets) experienced double-digit price gains over the same period, up from 15 percent in the fourth quarter of 2023.”

Compared to one year ago, the national median single-family existing-home price climbed five percent to $389,400. In the prior quarter, the year-over-year national median price increased 3.4 percent.

The 10 metro areas in the nation with the largest year-over-year median price increases – which Yun said can be influenced by the types of homes sold during the quarter — all registered price gains of at least 18.2 percent. Six of these markets are in Illinois and Wisconsin and eight of the top 10 most expensive markets are in California.

NAR Chief Economist Lawrence Yun speaks at a press conference at NAR convention. Photo Credit Ralph Bivins, Realty News Report Copyright 2024

HOUSTON HOME PRICES

While Houston wasn’t mentioned in the report, it is doing well this year. The median home price was $340,000 in April, up 3 percent from $330,000 in April 2023, according to the Houston Association of Realtors. (The median price is the midpoint where half the homes sold for more and half for less.)

HAR said the average price of a single-family home in Houston rose 4.6 percent to $437,198, up from $417,915 a year ago. This average home price was the second highest in Houston’s real estate history. The all-time record high was $438,350, a high-water mark reached in May 2022, the Houston Realtors group said.

Houston’s home sales also increased in April 2024. The Space City recorded 7,926 single-family residential transactions, up 9.2 percent over the 7,256 sales in April 2023, noted the local Realtors organization.

The national Realtors report said 7 percent of markets (15 of 221) experienced home price declines in the first quarter of 2024, down from 14 percent in the fourth quarter of 2023. Among these, says the NAR report, is the San Antonio-New Braunfels area, where prices declined 4.6 percent.

Once again, first-time buyers faced limited inventory and elevated home prices in the first quarter, though affordability conditions improved from the previous quarter as mortgage rates declined.

For a typical starter home valued at $331,000 with a 10 percent down payment, the monthly mortgage payment fell slightly to $1,998, down 5.7 percent from the previous quarter ($2,118). However, that was an increase of $168, or 9.2 percent from a year ago ($1,830).

First-time buyers typically spent 36.5 percent of their family income on mortgage payments, down from 39.3 percent in the prior quarter.

A family needs a qualifying income of at least $100,000 to afford a 10 percent down payment mortgage in 40.7 percent of U.S. markets, down from 47.1 percent in the previous quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 4.5 percent of markets, up from 2.3 percent in the prior quarter.


May 18, 2024 Realty News Report Copyright 2024

Photo credit: Cynthia Lescalleet, CALpix Copyright 2024

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