Overall, the median existing single-family home in the nation’s metro areas was $274,600 in the first quarter of 2020, a 7.7 percent year-over-year increase. Home prices increased annually in 174 of 181 metro areas, or 96 percent of American markets.
The numbers reflect the period immediately before the coronavirus outbreak. While the pandemic will have deep economic reverberations, experts do not expect home prices to fall dramatically in the coming years due to the limited supply of homes on the market. Only 1.50 million existing homes are currently available for sale, 10.2 percent lower than during the first quarter of 2019. This equals a 3.4-month supply at the current sales pace.
“The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic,” NAR Chief Economist Lawrence Yun said in a press statement. “Even now, due to very limited listings, home prices are showing no signs of buckling.”
Boise City, Idaho; Eugene, Oregon; and Colorado Springs, Colorado saw the most dramatic spikes in the value of its homes at 18.1 percent, 14.5 percent and 14.4 percent, respectively. Affordability improved slightly.
A 30-year fixed mortgage rate is down to 3.57 percent from 4.62 percent last year while a family earning $50,000 can afford a home in 135 metro areas in the U.S. Nonetheless, widening wealth gaps in notoriously expensive cities continue to be a problem — in San Jose, a family needs to earn $235,179 to be able to afford a median home on the market.
“Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers,” Yun said. “More supply and more listings are needed to provide a faster recovery for the economy.”