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Nearly seven in 10 metro markets registered home price increases in the first quarter, according to the National Association of Realtors’ (NAR) latest quarterly report. The share of metros with double-digit price increases during the quarter decreased to 7% from 18% in the fourth quarter of 2022.

“Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater mortgage rate sensitivity for high-priced homes,” says NAR chief economist Lawrence Yun.

The national median single-family existing-home price decreased 0.2% on a year-over-year basis to $371,200. On a regional basis, the South experienced the largest share of existing-home sales in the first quarter, with price appreciation of 1.4% on a year-over-year basis.

Prices increased 2.9% in the Midwest but fell 0.1% in the Northeast and 5.3% in the West. Yun says prices in some Western cities, including San Francisco; San Jose, California; and Reno, Nevada, fell by at least 10% on a year-over-year-basis. Prices also fell by 13.5% in Austin, Texas; 10.3% in Boise, Idaho; and 7.3% in Phoenix. Conversely, prices rose by at least 10% in Milwaukee; Dayton, Ohio; and Oklahoma City.

“Home prices are also lower in cities that previously experienced rapid price gains,” Yun says. “For example, home prices grew an astonishing 67% in three years in Boise City and Austin through 2022. The latest price reductions in these areas have improved housing affordability and led to some buyers returning given the sustained, rapid job creation in their respective markets.”

Price declines may be short-lived, though, as Yun says multiple offers—especially on affordable homes—are returning to the market due to the housing inventory shortage. Inventory in the first quarter averaged 1.63 million listings at any given time, a 40% reduction from the first quarter of 2019.

Housing affordability improved slightly in the first quarter. The monthly mortgage payment on a typical existing single-family home with a 20% down payment decreased 5.5% sequentially to $1,859. On a year-over-year basis, the typical payment is 33.1% higher than the first quarter of 2022. According to the NAR, families typically spent 24.5% of their income on mortgage payments, up from 19.5% a year ago.

For a typical starter home valued at $315,500 with a 10% down payment loan, the monthly mortgage payment fell 5.4% sequentially to $1,825. First-time buyers spent 37% of their family income on mortgage payments, down from 39.5% from the fourth quarter of 2022. The NAR classifies a mortgage as unaffordable if the monthly payment amounts to more than 25% of the family’s income.

According to the NAR, a family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 33% of markets, down from 38% in the prior quarter. A family needed a qualifying income of less than $50,000 to afford a home in 10% of markets in the quarter.

The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 11.7%. Those markets include Kingsport-Bristol-Bristol, Tennessee-Virginia; Oshkosh-Neenah, Wisconsin; Warner Robins, Georgia; Burlington, North Carolina; Elmira, New York; Oklahoma City, Oklahoma; Milwaukee-Waukesha-West Allis, Wisconsin; Appleton, Wisconsin; Hickory-Lenoir-Morganton, North Carolina; and Santa Fe, New Mexico.

Seven of the top 10 most expensive markets in the United States were in California, including San Jose-Sunnyvale-Santa Clara; Anaheim-Santa Ana-Irvine; San Francisco-Oakland-Hayward; San Diego-Carlsbad; Salinas; San Luis Obispo-Paso Robles; and Oxnard-Thousand Oaks-Ventura.