Home prices surged in almost every corner of the U.S. in the second quarter as robust demand continued to overwhelm the supply of homes for sale.
While the homebuying frenzy has shown signs of a slowdown in recent months, home-price growth has yet to cool.
The median sales price for single-family existing homes was higher in the second quarter compared with a year ago for 182 of the 183 metro areas tracked by the National Association of Realtors, the association said Thursday. In 94% of those metro areas, median prices rose by more than 10% from a year earlier.
Nationwide, the median single-family existing-home sales price rose 22.9% in the second quarter to $357,900 from a year ago, a record in data going back to 1968, NAR said.
Home prices have climbed in the past year as low interest rates and increased remote work spurred new homebuying demand. At the same time, the inventory of homes on the market has dropped as potential sellers canceled or delayed their plans to move. The homes that do hit the market sell quickly, often after a bidding war.
But in the past few months, high prices have attracted more sellers to the market and pushed some buyers to the sidelines. Active listings in the four weeks ended Aug. 1 were up 13% from their recent low in the four weeks ended in March, according to real-estate brokerage Redfin Corp.
“The housing market looks to move from ‘superhot’ to ‘warm,’ with markedly slower price gains,” said Lawrence Yun, NAR’s chief economist. “Housing affordability for first-time buyers is weakening.”
Many of the metro areas that posted the strongest price increases in the second quarter were in the South and West, though the biggest gainer was Pittsfield, Mass., with a 46.5% median-price increase from a year earlier. Following Pittsfield was the Austin, Texas, metro area, up 45.1%, and Naples, Fla., up 41.9%.
The only metro area to post a decline in the second quarter from a year earlier was Springfield, Ill., where median prices fell 6.9%, NAR said.
Fast-rising home prices are forcing some buyers out of the market and frustrating many more. About 28% of consumers surveyed by Fannie Mae in July said it was a good time to buy a home, a record low in data going back to mid-2010.
Prices are rising so rapidly they are outweighing the benefit of low borrowing rates. In the second quarter, the typical monthly mortgage payment for a single-family home rose to $1,215, from $1,019 a year earlier, NAR said, even as mortgage rates declined.
An increase in luxury home sales has helped push up median home prices in many markets. In Greenwich, Conn., buyers who expect to continue working from home full-time or part-time are looking for bigger houses with more office space, said Mark Pruner of Berkshire Hathaway HomeServices New England Properties. Greenwich is part of the Bridgeport, Conn., metro area, where prices rose 37.1% in the second quarter from a year earlier, according to NAR.
“Much of the rise in sales we’re seeing this year are at the higher price levels, and they’re also not using a mortgage,” Mr. Pruner said. “Mostly where we’re seeing the big jump up is the cash buyers.”
Many economists expect home-price growth to moderate by the end of the year. While the Covid-19 pandemic prompted many people to relocate and work remotely, that trend is likely to slow as companies call workers back to their offices, said Matthew Pointon, senior property economist at Capital Economics.