Home prices saw historic growth in the second quarter of 2021, according to the latest data from the National Association of Realtors… (NAR)
- The median sales price of single-family existing homes rose 22.9% year-over-year to $357,900. This is an increase of $66,800 dollars.
- Regionally the Northeast leads the way with 21.8% annual growth followed by the South (+21.0%), West (+20.9%), and Midwest (+17.1%).
NOTE: The median sales price of single-family existing homes rose in 99% of measured metro areas in Q2 up from 94% in Q2. Think we can hit triple-digits in Q3?
WOW: Twelve metro areas saw annualized price gains of over 30% with Pittsfield, Mass. getting the number one spot up 46.5% year-over-year.
- Other notable gains over 40% were Austin-Round Rock, Texas (+45.1%), Naples-Immokalee-Marco Island, Fla. (+41.9%), and Boise City-Nampa, Idaho (+41%)
Lawrence Yun, NAR chief economist, was amazed by the growth but did warn it’s unlikely to be repeated in the coming year…
- “Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year, but are unlikely to be repeated in 2022…There are signs of more supply reaching the market and some tapering of demand…The housing market looks to move from ‘super-hot’ to ‘warm’ with markedly slower price gains.”
As with most things in life, there is always a balance. Home prices skyrocketing has been great for homeowners, but not so great for wannabe buyers…
- The monthly mortgage payment as a share of the median family income rose to 16.5% in the second quarter up from 14% one year ago.
- Among first-time buyers, the mortgage payment on a 10% down payment loan jumped to 25% of income up from 21.2% one year ago.
Yun argued that housing affordability is weakening for first-time homebuyers…
- “Unfortunately, the benefits of historically-low interest rates are overwhelmed by home prices rising too fast, thereby requiring a higher income in order to become a homeowner.”
NOTE: Housing affordability is becoming a problem despite a significant reduction in mortgage rates. The effective 30-year fixed mortgage rate decreased to 3.05% in Q2 down from 3.29% one year ago.
