The real estate landscape in the United States is seeing a significant uptick in home prices, with nearly all metro areas experiencing growth in the first quarter of 2024, according to the latest report from the National Association of Realtors (NAR).
In a surprising turn of events, despite facing the highest mortgage rates in two decades, over 90% of the country's metro areas witnessed an increase in home prices. "Astonishingly, greater than 90% of the country’s metro areas experienced home price growth despite facing the highest mortgage rates in two decades," remarked Lawrence Yun, chief economist at NAR.
The report revealed that out of the 221 metro markets analyzed, a staggering 93% saw yearly home price gains during Q1 2024, with 30% experiencing double-digit increases. This surge in prices is attributed to the ongoing imbalance between housing supply and demand.
The national median single-family existing-home price climbed to $389,400, marking a 5% increase compared to the previous year. The South led the regions in single-family existing-home sales, with a notable 3.3% year-over-year price appreciation.
Notably, metro areas such as Fond du Lac, Wisconsin, and Kankakee, Illinois, witnessed the highest yearly median price increases, indicating a robust market in these regions.
In a noteworthy trend, eight out of the ten most expensive markets in the U.S. were concentrated in California, showcasing a resurgence in the West after experiencing price declines in the previous year.
Despite the rise in borrowing costs, housing affordability saw some improvement. The monthly mortgage payment on a typical single-family home decreased slightly, providing a silver lining for potential buyers. However, households still allocated a significant portion of their income to mortgage payments, indicating persistent challenges in affordability.
For first-time buyers, while the monthly mortgage payment on a typical starter home saw a decline, it remained higher compared to the previous year, reflecting the ongoing pressure on affordability.
Overall, the report underscores the complex dynamics of the U.S. housing market, with affordability concerns persisting despite the rise in home prices. As the market continues to evolve, prospective buyers and sellers will need to navigate these challenges with careful consideration.