The median price nationwide for existing single-family homes broke another record in the second quarter of the year, reaching $296,000 and increasing 5.3 percent year over year, the National Association of REALTORS® reports. Low inventory and high buyer demand continue to put upward pressure on home prices.
“The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings,” says NAR Chief Economist Lawrence Yun. “With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers.”
Prices for single-family homes rose in 90 percent of the markets NAR analyzed (161 out of 178 metros) in the second quarter. Thirteen percent—or 24 metros—saw double-digit increases; San Francisco and San Jose, two of California’s largest cities, posted a median sales price above $1 million.
Meanwhile, existing-home sales fell 1.7 percent in the second quarter to a seasonally adjusted annual rate of 5.41 million. Sales are 2.4 percent lower than a year ago. “Solid economic growth, a healthy labor market, and the large millennial population should be driving home sales much higher,” Yun says. “As long as economic conditions maintain current levels, there’s still a chance for sales to break out this year. However, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country.”
By the end of the second quarter, 1.95 million homes were on the market, which is just 0.5 percent higher than a year ago.
The median household income nationwide increased to $75,106 in the second quarter, but housing affordability remains problematic. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need to earn an annual income of $64,239; a 10 percent down payment would require an income of $60,858; and $54,096 would be needed for a 20 percent down payment, according to NAR.
“The unaffordable conditions in many of the largest metro areas—especially in the West—continues to be a growing concern for many middle-class households aspiring to buy a home,” Yun says. “Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand. Local governments need to acknowledge this glaring issue and ease some of the zoning laws, permitting processes, and regulations that are slowing construction.”
