Single-family home prices increased in 162 0f 178 of the nation’s metro areas in the second quarter of 2019, according to the National Association of Realtors’ metro affordability report released Wednesday. In the second quarter of 2019, the national median existing single-family home price hovered at $279,600, up 4.3 percent year-over-year.
Lower inventory and the need for new construction is leading to more competition and continuously increasing home prices, according to NAR’s chief economist Lawrence Yun.
“New home construction is greatly needed, however, home construction fell in the first half of the year,” Yun said in a statement. “This leads to continuing tight inventory conditions, especially at more affordable price points. Home prices are mildly reaccelerating as a result.”
In more than half of the metro areas tracked, the median home price increase more than 5 percent year-over-year. In total, 91 percent of the nation’s metros experienced increased home prices.
A number of high-priced metro areas were among the few that saw decreases. In the San Jose and Santa Clara, California-area, prices dropped 5.3 percent, in San Francisco and Oakland, home prices fell 1.9 percent and in Honolulu, Hawaii, prices decreased 1.2 percent. Those three metros, along with Anaheim and San Diego, were the highest priced metro areas in the country.
“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.”
The five lowest-cost metro areas were Decatur, Illinois; Youngstown, Ohio; Cumberland, Maryland; Binghamton, New York and Elmira, New York.
The national median income rose to $78,362 in the second quarter, but home price growth outpaced income growth, contributing to an overall decline in affordability.
“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.”