The housing market may be cooling overall, but home prices in 70% of metros still increased, according to the National Association of Realtors’ new quarterly report.
Even as 30-year fixed mortgage rates remained elevated − fluctuating between 6.1% and 6.7% in the first quarter − 7% of the 221 tracked metro areas registered double-digit price increases over the same period. That was down from 18% in the fourth quarter of 2022.
Compared to a year ago, the national median single-family existing-home price decreased 0.2% to $371,200.
“Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater mortgage rate sensitivity for high-priced homes,” said NAR Chief Economist Lawrence Yun.
Where did home prices go up?
Among the major U.S. regions, the South saw the largest share of single-family existing-home sales (46%) in the first quarter, with year-over-year price appreciation of 1%. Prices climbed 3% in the Midwest and slipped 0.1% in the Northeast and 5% in the West.
Cities in the West, such as San Francisco, San Jose and Reno saw home prices drop by at least 10% from a year ago. At the same time, prices rose by at least 10% from the previous year in cities like Milwaukee, Dayton and Oklahoma City.
“Home prices are also lower in cities that previously experienced rapid price gains,” said Yun. For example, in Boise, Idaho, where home prices grew by 67% in three years through 2022, saw a 10% decline in year-over-year prices in the first quarter. Price declined 13% in Austin and 7% in Phoenix.
Inventory in the first quarter averaged 1,630,000 listings at any given time, down 40% from the first quarter of 2019, a year before the onset of the COVID-19 pandemic.
Top 10 metro markets with largest home price gains
The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 12%, with three of those markets in Wisconsin and two in North Carolina.
- Kingsport-Bristol-Bristol, (CQ)Tennessee-Virginia. (19%)
- Oshkosh-Neenah, Wisconsin. (17%)
- Warner Robins, Georgia(16%)
- Burlington, North Carolina (15%)
- Elmira, New York (15%)
- Oklahoma City, Oklahoma (15%)
- Milwaukee-Waukesha-West Allis, Wisconsin (14%)
- Appleton, Wissonsin (12%)
- Hickory-Lenoir-Morganton, North Carolina (12%)
- Santa Fe, New Mexico (12%).
Housing affordability improves in the first quarter
In the first quarter, housing affordability improved slightly from the fourth quarter of 2022 when mortgage rates climbed higher than 7%. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,859. This represents a 5.5% decrease from the fourth quarter of last year ($1,967) but a jump of 33% – or $462 – from one year ago.
Families typically spent 24.5% of their income on mortgage payments, down from 26.2% in the previous quarter but up from 19.5% one year ago.
First-time buyers found a small measure of relief when looking to purchase a typical home during the first quarter with the quarterly declines in prices and mortgage rates. For a typical starter home valued at $315,500 with a 10% down payment loan, the monthly mortgage payment fell to $1,825, down 5.4% from the previous quarter ($1,930) but an increase of almost $450, or 32.5%, from one year ago ($1,377).
First-time buyers typically spent 37% of their family income on mortgage payments, down from 39.5% 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 33% of markets, down from 38% in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 10% of markets, up from 8.6% in the previous quarter.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
