While that’s unwelcome news for buyers, “homeowners have accumulated sizable wealth,” says NAR Chief Economist Lawrence Yun.
Home prices continue to rise in most areas of the country as more home buyers face affordability challenges. The median price nationwide for an existing single-family home in the third quarter was $406,900, which is 2.2% higher than a year prior, according to the National Association of REALTORS®. More than 80% of metro areas registered home price gains in the third quarter, with some markets posting double-digit increases.
“Homeowners have accumulated sizable wealth, with a typical homeowner gaining more than $100,000 in overall net worth since 2019 and before the height of the pandemic,” says NAR Chief Economist Lawrence Yun. “However, the persistent lack of available homes on the market will make the dream of homeownership increasingly difficult for younger adults unless housing supply is significantly boosted.”
Along with higher home prices, buyers in the third quarter faced surging borrowing costs, with the 30-year fixed-rate mortgage ranging from 6.81% to 7.31% in that time. The monthly mortgage payment on a typical existing single-family home, assuming a 20% down payment, was $2,192—up 19.2% from a year ago, NAR’s data shows.
In about 46% of the markets NAR tracks, a family needs a qualifying income of at least $100,000 to afford a typical home with a 10% down payment. A family with an income of less than $50,000 can afford a typical home in only 2.7% of markets, NAR’s research shows.
Where Home Prices Are Surging the Most
The South had the largest share of existing-home sales in the third quarter, along with year-over-year price appreciation at 1.7%, according to NAR’s report. But home prices have grown the most in the Northeast and Midwest, which each saw a 5.2% annual gain. In the West, prices were more subdued in the third quarter with a 0.6% increase.
The top 10 metros with the largest year-over-year price increases all recorded gains of at least 12.6%. Fond du Lac, Wis., topped the list, recording a price increase of 18.9% compared to a year ago, NAR’s report shows.
Overall, eight of the 10 priciest U.S. markets in the third quarter were all in California. The only markets outside California to fall on the list were Honolulu and Boulder, Colo.
Where Home Prices Are Moderating
Less than one-fifth of the 221 markets NAR tracks—or 17%—posted price declines in the third quarter, down significantly from 41% in the second quarter.
Some areas where housing had previously been booming saw prices decrease in the third quarter as they backed off from their pandemic-fueled highs. For example, year-over-year prices in the third quarter fell by 10.3% in Austin, Texas; 1.5% in Phoenix; 1.2% in Salt Lake City; and 1.1% in Dallas and Houston, the report shows.“Following the big price changes during the last several years, it’s natural to witness momentary swings in prices,” Yun says. “Some markets that experienced sizable home price gains since 2020 have turned lower, resulting in temporary relief for prospective home buyers. Also, a few markets in the West that experienced price declines in the prior quarter have seen prices rise again.”