Home prices rose on an annual basis in 99 percent of metro areas during the first quarter of 2021, according to a new report released by the National Association of Realtors (NAR).
In addition, 89 percent of metros saw double-digit price gains. In contrast, just 25 percent of metros saw double-digit price growth during the first quarter of 2020. At that time, the national housing inventory was at a more stable 3.3 months of inventory.
Many of the metros that saw the greatest home price increases were located in the Northeast, with Kingston, New York, seeing the highest price increase at a gain of 35.5 percent to a median sales price of $303,100. Following Kingston, Bridgeport-Stamford-Norwalk, Connecticut (34.3 percent increase to $580,400); Atlantic City-Hammonton, New Jersey (34 percent increase to $277,200); Barnstable Town, Massachusetts (33.1 percent increase to $567,600); and Boise City-Nampa, Idaho (32.8 percent increase to $422,600) rounded out the top five metros with the greatest price increases.
NAR Chief Economist Lawrence Yun noted that the widespread price gains are largely reflective of the supply and demand imbalance currently present in the market.
“The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off-the-radar in prior years for many home seekers,” Yun said in a statement.
As a result, buyers are facing a challenging market.
“The sudden price appreciation is impacting affordability, especially among first-time homebuyers,” Yun said. “With low inventory already impacting the market, added skyrocketing costs have left many families facing the reality of being priced out entirely.”
The nation’s most pricey markets were not excluded from double-digit price gains. San Jose-Sunnyvale-Santa Clara, California saw median price increase by 11.1 percent to $1.5 million; San Francisco-Oakland-Hayward, California saw median price increase by 21.8 percent to $1.2 million; and Urban Honolulu, Hawaii saw price gains of 19.2 percent to a median sales price of $940,400.
At a national level, the median existing-home sales price increased 16.2 percent from the previous year to $319,200 — record price growth not seen since 1989. The Northeast led in price growth, with prices rising 22.1 percent year over year. The West (18 percent), South (15 percent) and Midwest (14.4 percent) followed in year over year price gains.
Rising home prices have also contributed to increasing monthly mortgage payments, with the national average monthly mortgage payment now at $1,067, up from $995 the previous year. The effective 30-year fixed mortgage rate, however, declined to 2.93 percent from 3.57 percent in Q1 2020.
During the first quarter, families with a median income of $90,547 spent 14.1 percent of their income on mortgage payments with a 20 percent down payment on a 30-year fixed-rate mortgage. (Mortgage payments are considered affordable if they are 25 percent or less than a family’s income.)
The typical family in the U.S. needed an income of $51,216 in order to pay a 30-year fixed-rate mortgage with a 20 percent down payment, up from $47,760 the previous year. Still, in 68 percent of markets analyzed by NAR a family needed less than $50,000 to afford their mortgage.
On the other hand, in pricier metros, families still needed an income of greater than $100,000 to afford their mortgage, like in San Jose (needed income of $242,682), San Francisco ($194,145), Anaheim ($161,788) and Honolulu ($152,145).