Prices for single-family homes grew annually in 96 percent of metro markets tracked by the National Association of Realtors (NAR) in the second quarter of 2020 — all while forecasters are predicting an exodus from cities for suburban and second home market pastures.
The national median existing single-family home clocked in at $291,300 in the second quarter, an increase of 4.2 percent year over year.
“Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale,” NAR Chief Economist Lawrence Yun said in a statement. “Historically-low inventory continues to reinforce and even increase prices in some areas.”
Of the 181 metro areas tracked, 174 saw annual gains while 15 tracked double-digit gains, led by Huntsville, Alabama, and Memphis, Tennessee.
While the increasing home prices run counter to the argument that people are fleeing cities en masse, it should also be noted that the price appreciation is specifically for single-family homes in those metros and single-family homes are more scarce in many of the nation’s biggest metro areas.
“This last quarter showed heavy buyer activity in less occupied areas when compared to highly populated cities such as San Francisco, New York, and Washington, D.C., related in part to the longer shutdowns in these cities,” Yun said. “In the midst of the pandemic, some buyers are looking for housing in less crowded and more affordable metros.”
Low mortgage rates are also contributing to demand and high prices, but the lack of inventory is also pushing home prices up, according to Yun.
“Unless an increasing number of new homes are constructed, some buyers could miss out on the opportunity to purchase a home or have the opportunity delayed,” Yun said. “In the meantime, prices show no sign of decreasing.”