An overwhelming majority of metropolitan areas experienced home-appreciation gains in the third quarter of 2019, according to the latest quarterly report by the National Association of Realtors, with the Washington region seeing growth – but not as high a rate as the national average.
Single-family median home prices increased year-over-year in 93 percent of measured markets in the third quarter, with 166 of 178 metropolitan statistical areas showing sales price gains, according to new data. That is up from the 91-percent share in the second quarter of 2019.
The national median existing single-family home price in the third quarter was $280,200, up 5.1 percent from the third quarter of 2018 ($266,500).
That robust growth rate might make sellers giddy, but may not be a positive for overall market health.
“Incremental price increases are to be expected, but the housing market has been seeing re-acceleration in home prices, as more buyers want to take on lower interest rates in the midst of insufficient supply,” said Lawrence Yun, NAR’s chief economist. “Unfortunately, income and wages are not rising as fast and will make it difficult to buy once rates rise.”
Ninety-six out of 178 metro markets under study had year-over-year price growth of 5 percent or higher. Ten metro areas experienced double-digit increases, including Montgomery, Ala. (12.6 percent); Spokane, Wash. (12.6 percent); and Salt Lake City (12 percent).
Yun, who has repeatedly called for more homes to be built, said some areas may finally receive at least moderate relief on that front.
“In some markets, yes, we’re seeing construction companies ramp up plans to build more houses,” Yun said. “But in an overall comparison of 2019 and 2018, fewer homes have been built. So hopefully home builders will expand their plans in order to better address the national inventory shortage.”
The Washington region saw a 3.2-percent growth rate to $439,800, according to the data. Part of the reason for that lower-than-the-national-average appreciation: The region never saw its housing costs plummet as significantly as many other markets during the recession, so the growth curve during the market rebound has been lower than places where the decline had been more substantial.
The two other Virginia metro areas on the list showed year-over-year increases: Richmond saw its median sales price rise 5.9 percent to $283,800 while the Hampton Roads area posted a 3-percent increase to $242,000.
The San Jose, Calif., metro area had the highest media sales price for the third quarter, at $1,240,000. But that was down 4.6 percent from a year before, when it had stood at $1,340,000.
Other metro areas where single-family median home prices declined included three other high-cost California enclaves: San Francisco (down 2.5 percent to $964,000) Anaheim (down 0.5 percent to $826,000) and San Diego (down 0.8 percent to 645,000). Honolulu (down 0.6 percent to $813,500) also declined.
The highest-priced metro area to post a year-over-year increase was Los Angeles, up 3.3 percent to $649,600.
The five lowest-cost metro areas in the second quarter were Cumberland, Md. ($105,300, down 4.5 percent); Youngstown, Ohio ($106,800, up 9.4 percent); Decatur, Ill. ($107,900, up 5 percent); Elmira, N.Y. ($115,200, down 5.3 percent); and Peoria, Ill. ($123,600, down 5.9 percent).
Regionally median prices rose 4.2 percent to $411,500 in the West, 2.4 percent to $308,800 in the East, 5.4 percent to $246,800 in the South and 7.9 percent to $222,800 in the Midwest.
Even as prices rose across most of the country, home affordability improved in the third quarter compared to the previous reporting period, due in large part to historically low interest rates. First-time-homebuyer affordability improved, as well.
“It is promising that first-time buyers needed a lower level of income to afford a mortgage payment,” Yun said.
Data for the fourth quarter of 2018 will be released in mid-February.