Low inventory levels of moderately priced homes continued to stifle home sales in the third quarter, maintaining the trend of increasing metro market prices according to the latest quarterly report by the National Association of Realtors®.
The national median existing single-family home price in the third quarter was $266,900, up 4.8% from the third quarter of 2017 ($254,700). The median sales price in the second quarter increased 4.9% from the second quarter of 2017.
Single-family home prices increased in 93% of measured markets last quarter, with 166 out of 178 metropolitan statistical areas showing sales price gains in the third quarter compared to a year ago. 18 metro areas (10%) experienced double-digit increases, down from 24 in the second quarter.
Lawrence Yun, NAR chief economist, said low inventory persisted in suppressing the market during the third quarter. “Though inventory is more than adequate on the upper-end market, the insufficient supply of low to mid-priced homes in metro markets with strong job growth continues to drive up prices and push prospective buyers out of the market,” he said.
Total existing-home sales, including single family homes and condos, decreased 2.6% to a seasonally adjusted annual rate of 5.273 million in the third quarter, down from 5.413 million in the second quarter. That number is 2.4% lower than the 5.403 million pace during the third quarter of 2017.
“A strong economy and consistent job growth should be driving up home sales; however, would-be home buyers are struggling to find a home they can afford,” said Yun. “As mortgage rates continue to rise, reaching the decade’s highest rates this quarter, an increase in the supply of affordable homes has become even more important to help temper price growth across the country.”
At the end of the third quarter, there were 1.88 million existing homes available for sale, 1.1% above the 1.86 million homes for sale at the end of the third quarter in 2017. The average supply during the third quarter was 4.3 months – up from 4.2 months in the third quarter of last year.
National family median income rose to $76,608 in the third quarter, but overall affordability decreased from a year ago because of higher mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $64,480, while a 10% down payment would require an income of $61,086, and $54,299 would be necessary for a 20% down payment.
“Aspiring middle-class home buyers continue to face affordability issues, as buyers are increasingly being priced out in the West while the rest of the country struggles, too,” said Yun. “The market desperately needs home builders to begin constructing more moderately priced single-family home and condominiums to help satisfy demand and mitigate rapid price growth.”
The five most expensive housing markets in the third quarter were the San Jose, California metro area, where the median existing single-family price was $1,300,000; San Francisco-Oakland-Hayward, California, $989,000; Anaheim-Santa Ana-Irvine, California, $830,000; urban Honolulu, $818,600; and San Diego-Carlsbad, $650,000.
The five lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio, $97,600; Decatur, Illinois, $102,800; Cumberland, Maryland, $110,300; Wichita Falls, Texas, $115,600; and Elmira, New York, $121,600.
Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $244,100 in the third quarter, up 2.3% from the third quarter of 2017 ($238,600). Eighty-two% of metro areas showed gains in median condo prices from a year ago.
Total existing-home sales in the Northeast sat at an annual rate of 680,000 (down 0.5% from last quarter) and are down 3.8% from a year ago. The median existing single-family home price in the Northeast was $301,500 in the third quarter, up 6.1% from a year ago. In the Midwest, existing-home sales fell 0.3% in the third quarter and are 1.0% below a year ago. The median existing single-family home price in the Midwest grew 2.1% to $206,800 in the third quarter from the same quarter a year ago. Existing-home sales in the South declined 4.4% in the third quarter but are 0.3% higher than the third quarter of 2017. The median existing single-family home price in the South was $234,300 in the third quarter, 3.4% above a year ago. In the West, existing-home sales in the third quarter decreased by 2.9% and are 7.9% below a year ago. The median existing single-family home price in the West increased 4.8% to $395,500 in the third quarter from the third quarter of 2017.