Regional home price trends diverge this quarter, NAR says

U.S. home prices haven’t changed much this quarter. But regional trends looked wildly different, a report by the National Association of Realtors says. 

“Just like the weather, large local market variations exist despite the minor change in the national home price,” NAR’s chief economist Lawrence Yun said in a press release.

The national median single-family home price reached $402,600 this quarter, the organization’s Metropolitan Median Area Prices and Affordability report found. It’s a dip of only 2.4% year-over-year and 0.2% month-over-month.

Why such a small change? Regional housing market price shifts almost canceled each other out.

In around 60% of the nation, homes got more expensive this quarter, NAR found. Most of these markets are in the northwest, up 3.2%, and midwest 1.4% higher. Prices increased the most in Fond du Lac, Wisconsin, New Bern, North Carolina and Duluth, Minnesota.

Homes became cheaper in the rest of the country. Prices slid by 2.2% in the south and 5.8% in the west year-over-year. In Austin, Texas, prices dipped 19.1%, the biggest market decrease, followed by San Francisco, Salt Lake City and Las Vegas. 

Even California prices fell — San Jose, San Francisco and Anaheim were the top three most expensive cities; each still had a median sales price of over $1 million, but depreciation of 5.3%, 11.3% and 3.8%, respectively.

“Interestingly, price declines occurred in some of the fastest job-creating markets,” Yun said. “Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases.”

Nevada, Texas and New Mexico saw the highest job growth rates this year, all around 4%, according to the Bureau of Labor Statistics. The rest of the country saw modest growth, too: only Vermont and Rhode Island had lower nonfarm employment versus last year.

The south made up 46% of sales this quarter, the largest share of all U.S. regions. Yun thinks this means prices will soon bounce back, noting “the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”

Affordability worsened because of high mortgage rates, NAR said. An already-built house with a 20% down payment would cost around $2,051 a month, which is 11.6% more than last year and 10% more than last quarter. This eats up 27% of the average family income, the report says.

And first time homebuyers have it even harder: the monthly mortgage payment on a median-priced home with a 10% down payment reached $2,012 this quarter, $200 more a month than the same time last year.

New buyers “needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 40.3% of markets,” the report said. Last quarter, buyers only needed an income that large in 33% of markets. Families with an income of $50,000 could only afford to buy a home in 6.3% of markets.