Home prices keep going up, with double-digit gains in 70% of metro areas
Price appreciation continues to maintain its momentum in the first quart of 2022. More metro areas saw double-digit home price gains over the last three months than the last quarter of 2021, and the median sales price of single-family existing family homes rose at a faster pace.
The National Association of Realtors® (NAR) released their latest quarterly report on home price appreciation on Tuesday morning, and the trends of rising home values have continued through the start of 2022. In fact, the rate of increasing prices is speeding up. Consider:
- Metro areas seeing double digit price gains:
- Q1 2022: 70%
- Q4 2021: 66%
- Median single-family existing-home price increase
- up 15.7% Q1 2022 from Q1 2021
- up 14.3% Q4 2021 from Q4 2020
These increases were seen in all four regions, with price gains in the South far outpacing the other four regions.
- Northeast: up 6.7%
- Midwest: up 8.5%
- South: up 20.1%
- West: up 5.9%
Familiar culprits for lead to affordability problems
"Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022," said Lawrence Yun, NAR chief economist. "Given the extremely low inventory, we're unlikely to see price declines, but appreciation should slow in the coming months."
The main driver of the rising home prices is the lack of available homes for sale. Inventory has been a problem for years, but the low mortgage rates of the last two years exacerbated that problem. Now, inventory remains low, which continues to push home prices up, but with mortgage rates getting higher, we’re seeing a new challenge to homeownership in affordability.
"I expect more pullback in housing demand as mortgage rates take a heavier toll on affordability," Yun says. "There are no indications that rates will ease anytime soon."
He notes that the monthly mortgage payment for a typical starter home of $313,000 and 10% down payment would be $1,363. That’s $313 more than the monthly payment of the same home a year ago, a 30% increase.
"Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well," Yun added.
Where home prices are going up
The highest year-over-year gains in price are found in many smaller and midsize markets. "Traditionally, homes in these markets were viewed as relatively inexpensive, but with recent migration trends, prices have increased significantly," Yun said. "As more families relocate to various areas, we may see some surprising markets on our top 10 list.”
- Punta Gorda, Fla. (34.4%)
- Ocala, Fla. (33.8%)
- Ogden-Clearfield, Utah (30.8%)
- Lakeland-Winter Haven, Fla. (30.1%)
- Decatur, Ala. (28.9%)
- Tampa-St. Petersburg-Clearwater, Fla. (28.8%)
- Fort Collins, Colo. (28.4%)
- North Point-Bradenton-Sarasota, Fla. (28.0%)
- Myrtle Beach-Conway-North Myrtle Beach, N.C.-S.C. (28.0%)
- Salt Lake City, Utah (27.9%)
"Price gains in many smaller, tertiary cities are now outpacing those in the more expensive primary and secondary markets," Yun continued. "This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home, making relocation to smaller markets possible."