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WASHINGTON (November 1, 2018) – Low inventory levels of moderately priced homes continue to stifle home sales and maintain 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 percent from the third quarter of 2017 ($254,700). The median sales price in the second quarter increased 4.9 percent from the second quarter of 2017.
Single-family home prices increased in 93 percent of measured markets last quarter, with 166 out of 178 metropolitan statistical areas1 (MSAs) showing sales price gains in the third quarter compared to a year ago. Eighteen metro areas (10 percent) experienced double-digit increases, down from 24 in the second quarter.
Lawrence Yun, NAR chief economist, says 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 sales2, including single family homes and condos, decreased 2.6 percent 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 percent 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 homebuyers 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 sale3, 1.1 percent 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 $76,6084 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 percent down payment would need an income of $64,480, while a 10 percent down payment would require an income of $61,086, and $54,299 would be necessary for a 20 percent down payment.
“Aspiring middle-class home buyers continue to face affordably 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 homebuilders 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 percent from the third quarter of 2017 ($238,600). Eighty-two percent of metro areas showed gains in median condo prices from a year ago.
Regional Breakdown
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 percent from a year ago. The median existing single-family home price in the Northeast was $301,500 in the third quarter, up 6.1 percent from a year ago.
In the Midwest, existing-home sales fell 0.3 percent in the third quarter and are 1.0 percent below a year ago. The median existing single-family home price in the Midwest grew 2.1 percent to $206,800 in the third quarter from the same quarter a year ago.
Existing-home sales in the South declined 4.4 percent in the third quarter but are 0.3 percent 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 percent above a year ago.
In the West, existing-home sales in the third quarter decreased by 2.9 percent and are 7.9 percent below a year ago. The median existing single-family home price in the West increased 4.8 percent to $395,500 in the third quarter from the third quarter of 2017.
The National Association of Realtors® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.
Data tables for MSA home prices (single family and condo) are posted at https://www.nar.realtor/research-and-statistics/housing-statistics/metro.... If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.
1Areas 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: http://www.census.gov/population/estimates/metro-city/List4.txt.
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.
Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
2The 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.
3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
4Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 3.9%.