The median single-family existing home price was $413,500 in the second quarter — the first time the price has topped $400,000 this quarter, according to the National Association of Realtors’ latest quarterly report.
Home prices in the quarter rose 14.2% from a year earlier, slightly slower than the 15.4% year-over-year price increase experienced in the first quarter.
The majority of US metro areas, 80%, saw double-digit home price increases last quarter, or 148 of 185. That’s up from 70% of cities in the first quarter.
“Home prices have increased at a faster pace than wage gains, especially for low- and middle-income workers,” said Lawrence Yun, chief economist at NAR.
The monthly mortgage payment on a typical single-family home with a 20% down payment rose 32% quarter-over-quarter and nearly 50%, according to NAR’s report.
According to the report, the monthly mortgage payment on a typical existing single-family home with a 20% down payment rose to $1,841 last quarter. That’s an increase of $444 per month from the first quarter and $612 per month a year ago.
Households typically spend 24.3% of their income on mortgage payments, up from 18.7% in the previous quarter and 16.9% a year ago. Generally, housing is considered “affordable” when homeowners pay more than 25% to 30% of their gross income for housing costs.
First-time buyers typically spent 36.8% of their household income on mortgage payments in the second quarter, up from 28.7% in the previous quarter.
On a typical $351,500 starter home with a 10% down payment loan, the monthly mortgage payment rose to $1,810 — up $433 from the first quarter and $597 a year ago, according to the report.
Cities with the highest inflation
A family needs to earn at least $100,000 to get a 10% down payment mortgage in 53 US markets, the report said. This is nearly double the 27 markets that fell into this category in the previous quarter.
There are 23 markets where a family needs to earn less than $50,000 to afford a home — places like Youngstown, Ohio; Syracuse, New York or Florence, South Carolina. This is significantly lower than the 63 markets in the previous quarter.
“Local job market performance and supply availability are clear distinguishing factors driving local home price growth,” Yun said. “Job growth is positive and should be applauded, but supply constraints are creating unnecessary barriers to ownership opportunities.”
The South accounted for 44% of single-family existing-home sales in the second quarter and posted the largest price appreciation of 18.2%. Prices rose 12.7% in the West, 10.1% in the Northeast and 9.7% in the Midwest during the quarter.
The metro area, which includes Fayetteville, Springdale and Rogers, Arkansas, saw the largest price increase in the second quarter, with home prices up 31.9% from a year ago. Seven of the top 10 cities with the largest annual price gains were in Florida, and all saw price increases of 25% or more from a year ago, including Lakeland and the Winter Haven area, up 31.4%; Naples, up 28.9%; Sarasota, up 28.8%; Tampa and St. Petersburg, 28.0%; Cape Coral and Fort Myers, 27.8%; Punta Gorda, 27.4%; and Ocala, 26.7%. Outside of Florida, other cities in the top 10 include Ogden, Utah, up 25.5% and the Myrtle Beach area of South Carolina, up 28.5%.
Five of the nation’s 10 most expensive markets, including San Jose, are in California The median price here is $1.9 million, followed by San Francisco at $1.55 million, Anaheim at $1.3 million, San Diego at $965,900 and Los Angeles at $825,700.
Other high-priced cities include Honolulu, with a median price of $1.145 million; Boulder, Colorado $933,400; Naples, Florida $850,000; Seattle at $818,900; and Boston $722,200.
While national home prices are not expected to fall, softening sales will lead to price reductions and slower price growth in many markets, Yun said, providing little relief to prospective buyers.
“The recent drop in mortgage rates will bring additional buyers into the market,” he said. “Especially in places where home prices are still affordable and adding jobs.”