According to the National Association of Realtors’ latest report on median home prices and affordability, 99% of the U.S. metro areas covered saw year-over-year home price increases in the first quarter of 2021. Eighty-nine percent saw price gains in double-digit percentages. To compare, 25% of metro areas saw similar growth in the first quarter of 2020.
Kingston, New York, had the highest price gains in the country, up 35.5% year over year to $303,100 in the first quarter. Bridgeport-Stamford-Norwalk, Connecticut, came in second, up 34.3% to $580,400, and Atlantic City-Hammonton, New Jersey, in third, up 34% to $277,200. According to NAR, price appreciation can vary by the types of housing sold in the area, especially in small cities.
"Significant price increases throughout the country simply illustrate strong demand and record-low housing supply," says Lawrence Yun, NAR chief economist. "The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off the radar in prior years for many home seekers."
The nation’s most expensive markets are among those seeing double-digit price growth, led by San Jose-Sunnyvale-Santa Clara, California, up 11.1% to $1.5 million in the first quarter.
The median existing single-family sales price rose by 16.2% YOY to $319,200 in Q1 2021. This marks the highest annual gain recorded for home prices since 1989. All four regions recorded double-digit price growth YOY, led by the Northeast at 22.1% and followed by the West at 18%, the South at 15%, and the Midwest at 14.4%.
"These higher home prices underscore the importance of stepping up housing supply," says Yun. "An increase of inventory—either by new construction or by converting abandoned and unused retail or hotels—would combat the affordability problem."
The national average monthly mortgage payment has risen to $1,067 from $995 one year ago, even as the effective 30-year fixed mortgage rate has fallen to 2.93%. On average, families with a median income of $90,547 spent 14.1% of their income on mortgage payments, given a 20% down payment and a 30-year fixed mortgage. Nationally, a family typically needed an income of $51,216 or more to meet the affordability threshold—no more than 25% of the family’s income—for mortgage payments in these parameters.