Home values saw more gains in 91% of 178 U.S. metro areas during the second quarter, according to a new report from the National Association of Realtors published Wednesday.
The data shows that the national median price for a single-family home came to $279,000 in Q2, up 4.3% from a year before. Nine-three of the 178 metros tracked by the NAR saw price appreciation of at least 5%. Ten metros actually posted double-digit increases, though most of those were more modestly priced markets such as in Boise City-Nampa, Idaho; Abilene, Texas; Columbia, Mo.; Burlington-South Burlington, Vt.; and Atlantic City-Hammonton, N.J.
Lawrence Yun, the NAR’s chief economist, said home prices were growing due to tight inventory conditions at lower price points in many markets.
“Housing unaffordability will hinder sales irrespective of the local job market conditions,” Yun said. “This is evident in the very expensive markets as home prices are either topping off or slightly falling.”
Most high-priced metro areas, where the median home price is $500,000 or more, saw values fall slightly compared to a year ago. San Jose-Sunnyvale-Santa Clara, Calif., which is the most expensive metro to buy a home in the nation, saw median prices fall 5.3%. And San Francisco-Oakland-Hayward, Calif., saw a drop of 1.9%
Yun also said in the report there should be more home buying activity right now, but that economic uncertainty could be holding some people back
“The exceptionally low mortgage rates will help with housing affordability over the short run,” Yun said. “But if the low interest rates are due to weakening economic confidence, as reflected from a correction in the stock market, then the low rates will not help with job growth and will eventually hinder home buying and home construction.”
Another problem is that housing affordability is on the decline, despite wage growth. In the second quarter, national family median incomes rose to $78,366. But home price growth has outpaced this, which means homes are actually less affordable now than they were in the last quarter.
For instance, a home buyer making a 5% down payment would need an income of $62,192 to purchase a single-family home at the national median price, while a 10% down payment would require an income of $58,918, and $52,372 would be required for a 20% down payment.