Almost 60% of Metro Areas Posted Home Price Gains in the Second Quarter of 2023 (NAR)
Almost 60% of metro markets (128 out of 221) registered home price gains in the second quarter of 2023 as 30-year fixed mortgage rates oscillated between 6.28% and 6.71%, according to the National Association of Realtors®’ latest quarterly report. Five percent of the 221 tracked metro areas registered double-digit price increases over the same period, down from seven percent in the first quarter.
“Home sales were down due to higher mortgage rates and limited inventory,” said NAR Chief Economist Lawrence Yun. “Affordability challenges are easing due to moderating and, in some cases, falling home prices, while the number of jobs and incomes are increasing.”
Compared to a year ago, the national median single-family existing-home price dipped 2.4% to $402,600. In the prior quarter, the year-over-year national median price decreased 0.2%.
“Just like the weather, large local market variations exist despite the minor change in the national home price,” Yun added.
Among the major U.S. regions, the South saw the largest share of single-family existing-home sales (46%) in the second quarter, with year-over-year price depreciation of 2.2%. Prices rose 3.2% in the Northeast and 1.4% in the Midwest but retreated 5.8% in the West.[i]
Year-over-year prices in the second quarter declined by 19.1% in Austin, 11.3% in San Francisco, 9.6% in Salt Lake City and 7.4% in Las Vegas.
“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. In fact, the number of homes receiving multiple offers, alongside continuing job and wage gains, signal price slides may already be a thing of the past.”
The top 10 metro areas with the largest year-over-year price increases all recorded gains of at least 10.4%, with six of those markets in the Midwest. Those include Fond du Lac, Wis. (25.3%); New Bern, N.C. (19.7%); Duluth, Minn.-Wis. (14.6%); Davenport-Moline-Rock Island, Iowa-Ill. (12.6%); Allentown-Bethlehem-Easton, Pa.-N.J. (11.7%); Kingsport-Bristol-Bristol, Tenn.-Va. (11.5%); Peoria, Ill. (11.5%); Green Bay, Wis. (10.9%); Trenton, N.J. (10.5%); and Cape Girardeau, Mo.-Ill. (10.4%).
Seven of the top 10 most expensive markets in the U.S. were in California. Overall, those markets are San Jose-Sunnyvale-Santa Clara, Calif. ($1,800,000; -5.3%); San Francisco-Oakland-Hayward, Calif. ($1,335,000; -11.3%); Anaheim-Santa Ana-Irvine, Calif. ($1,250,000; -3.8%); Urban Honolulu, Hawaii ($1,060,700; -7.4%); San Diego-Carlsbad, Calif. ($942,400; -2.4%); Salinas, Calif. ($915,600; 0.6%); Oxnard-Thousand Oaks-Ventura, Calif. ($904,900; -2.7%); San Luis Obispo-Paso Robles, Calif. ($890,900; -3.2%); Boulder, Colo. ($871,200; -6.7%); and Naples-Immokalee-Marco Island, Fla. ($850,000; unchanged).
About two in five markets (41%; 90 of 221) experienced home price declines in the second quarter, up from 31% in the first quarter.
Lack of inventory and affordability continued to impact first-time buyers during the second quarter. For a typical starter home valued at $342,200 with a 10% down payment loan, the monthly mortgage payment grew to $2,012, up 9.9% from the previous quarter ($1,830). That was an increase of more than $200, or 11.3%, from one year ago ($1,807). First-time buyers typically spent 40.7% of their family income on mortgage payments, up from 37.1% in the prior quarter.
A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 40.3% of markets, up from 33% in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 6.3% of markets, down from 10% in the previous quarter.
Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at:
Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.
The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single-family, townhomes, condominiums and co-operative housing.