The median existing single-family home price in the second quarter was $413,500 — the first time this quarterly price has risen above $400,000, according to the latest quarterly report from the National Association of Realtors.
Home prices for the quarter were up 14.2% from a year ago, slightly slower than the 15.4% year-over-year price increase in the first quarter.
A majority, 80%, of US metro areas saw double-digit home price increases last quarter, or 148 out of 185. That’s up from 70% of cities in the first quarter.
“Home prices have increased at a pace that has far outpaced wage gains, especially for low- and middle-income workers,” said Lawrence Yun, NAR’s chief economist.
The monthly mortgage payment on a typical existing single-family home with a 20% down payment increased by 32% quarter over quarter and nearly 50% from a year ago, according to the NAR report.
The monthly mortgage payment on a typical existing single-family home with a 20% down payment jumped to $1,841 last quarter, according to the report. That’s an increase of $444 a month from the first quarter and $612 a month from a year ago.
Households typically spent 24.3% of their income on mortgage payments, up from 18.7% in the previous quarter and 16.9% a year ago. In general, housing is considered “affordable” when a homeowner pays no 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 during 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 up $597 from a year ago, according to the report.
Cities with the biggest price increases
A household had to earn at least $100,000 to afford a 10% down payment mortgage in 53 US markets, the report said. That’s almost double the 27 deals in this category in the previous quarter.
There were 23 markets where a family needed to earn less than $50,000 to buy a home – places like Youngstown, Ohio; Syracuse, New York or Florence, South Carolina. That was down significantly from 63 deals in the previous quarter.
“Local job market performance and supply availability are the clear differentiating 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 home sales in the second quarter and posted the largest price appreciation of 18.2%. Prices were up 12.7% in the West, 10.1% in the Northeast, and 9.7% in the Midwest during the quarter.
The metro area that includes Fayetteville, Springdale and Rogers, Arkansas saw the biggest price increase in the second quarter with home prices up 31.9% from a year ago. Seven of the top 10 cities with the biggest annual price gains were in Florida, and all saw price increases of 25% or more from a year ago, including the Lakeland and Winter Haven area, up 31.4% ; Naples, up 28.9%; Sarasota, up 28.8%; Tampa and St. Petersburg, up 28.0%; Cape Coral and Fort Myers, up 27.8%; Punta Gorda, up 27.4%; and Ocala, up 26.7%. Outside of Florida, other cities in the top 10 were Ogden, Utah, up 25.5% and the Myrtle Beach area in South Carolina, up 28.5%.
Five of the 10 most expensive markets in the country were in California, including San Jose where the median price is $1.9 million, San Francisco with $1.55 million, Anaheim at $1.3 million, San Diego at $965,900 and $825,700 in Los Angeles.
Other high-priced cities include Honolulu, with a median price of $1.145 million; Boulder, Colorado for $933,400; Naples, Florida for $850,000; Seattle at $818,900; and Boston at $722,200.
While national home prices are not expected to fall, price reductions and the rate of price appreciation have slowed in many markets, which may provide some relief to potential buyers, Yun said.
“The recent decline in mortgage rates will bring additional buyers to the market,” he said. “Especially in those places where house prices are still relatively affordable and where jobs are being added.”