Bursting demand and inadequate inventory led to a new peak for prices this spring, according to the latest National Association of REALTORS® (NAR) quarterly report. In the second quarter of the year, the existing-home median price rose to $269,000, up 5.3 percent year-over-year—a record over the second quarter of 2017.
“The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings,” says Lawrence Yun, chief economist at NAR. “With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers.”
Compared to the second quarter of 2017, there was an improvement in inventory this year, but not enough to satisfy, the report shows. There were 1.95 million existing homes for sale in the second quarter of the year, a 0.5 percent increase from the second quarter of 2017—but at 4.1 months, the squeeze was tighter.
According to Yun, the burden is curbing sales. Existing-home sales ticked down 1.7 percent—a disappointing figure, given gains across other indicators.
“Solid economic growth, a healthy labor market and the large millennial population should be driving home sales much higher,” Yun says. “As long as economic conditions maintain current levels, there’s still a chance for sales to break out this year; however, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country.”
Additional highlights from Q2:
- The average homebuyer with a 5 percent down payment needed to earn $64,239 to afford a home at the median (nationally); the average homebuyer with a 10 percent down payment needed to earn $60,858; and the average homebuyer with a 20 percent down payment needed to earn $46,808.
- Ninety percent of markets measured (161 of 178 metros) had prices rise year-over-year, with 13 percent in double-digit territory.
- The costliest housing markets were: San Jose, Calif. ($1,405,000 existing-home median); San Francisco-Oakland-Hayward, Calif. ($1,070,000); Anaheim-Santa Ana-Irvine, Calif. ($830,000); Honolulu, Hawaii ($795,200); and San Diego-Carlsbad, Calif. ($645,000).
- The most inexpensive markets were: Youngstown-Warren-Boardman, Ohio ($94,400); Cumberland, Md. ($94,900); Decatur, Ill. ($96,900); Elmira, N.Y. ($106,300); and Erie, Pa. ($121,700).
- In the Midwest, the existing-home median was $210,600, up 3.5 percent year-over-year.
- In the Northeast, the existing-home median was $288,900, up 2.3 percent year-over-year.
- In the South, the existing-home median was $238,500, up 4 percent year-over-year.
- In the West, the existing-home median was $403,300, up 8.3 percent year-over-year.
For more information, please visit www.nar.realtor.