In spite of significant headwinds, home prices keep going up.
Rising mortgage rates, a dip in home sales and the very real fears about housing affordability did little to slow the growth of home price appreciation in the second quarter of 2022. According to the National Association of Realtors® (NAR), median single-family existing-home prices rose 14.2% nationwide this past quarter. The average home price rose above $400,000 for the first time, landing at $413,500.
This continues a trend seen over the last three quarters of more and more metro areas seeing double-digit price gains.
- Metro areas seeing double digit price gains:
- Q2 2022: 80%
- Q1 2022: 70%
- Q4 2021: 66%
However, year-over-year price growth dropped somewhat from Q1, coming in line with the fourth quarter of 2021, giving some hope that home prices may be experiencing easing upward pressure.
- Median single-family existing-home price increase
- Up 14.2% Q2 2022 from Q2 2021
- up 15.4% 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 10.1%
- Midwest: up 9.7%
- South: up 18.2%
- West: up 12.7%
Relief in sight?
Despite the challenges that homebuyers are facing, we’re starting to see some home price relief in parts of the country. High home prices were met by a drop in home purchases. This has allowed for prices to come down, or at least fewer homes sold above asking.
"Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers," said Lawrence Yun, Chief Economist at NAR. "Overall, the national price deceleration inevitably followed the softening sales, providing well-positioned prospective buyers a small measure of welcomed relief. The recent dips in mortgage rates will bring additional buyers to market, especially in those places where home prices are still relatively affordable and where jobs are being added."
Home prices are going up down South
The highest year-over-year gains in price were mostly bunched in the South, with seven of the top 10 markets located in Florida. All of these increases were 25% higher than the second quarter of 2021.
- Fayetteville-Springdale-Rogers, Ark.-Mo. (31.9%)
- Lakeland-Winter Haven, Fla. (31.4%)
- Naples-Immokalee-Marco Island, Fla. (28.9%)
- North Port-Sarasota-Bradenton, Fla. (28.8%)
- Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. (28.5%)
- Tampa-St. Petersburg-Clearwater, Fla. (28.0%)
- Cape Coral-Fort Myers, Fla. (27.8%)
- Punta Gorda, Fla. (27.4%)
- Ocala, Fla. (26.7%)
- Ogden-Clearfield, Utah (25.5%)
Yun notes that “the local job market performance and supply availability are the clear distinguishing factors driving local home price growth. Job growth is positive and should be applauded, but supply restraints are creating unnecessary barriers to ownership opportunities."