U.S. Home Prices Surge Higher, Pricing Out Many Buyers
By Nicole Friedman
Home prices rose in nearly every corner of the country in the
first quarter, showing little sign of fading soon with limited
housing inventory and robust buyer demand.
The median sales price for existing single-family homes was
higher in the quarter compared with a year ago for 182 of the 183
metro areas tracked by the National Association of Realtors, the
association said Tuesday. In 89% of those metro areas, median
prices rose by more than 10% from a year earlier.
The current home-sales boom has been unusually widespread, with
low mortgage interest rates fueling strong demand across the U.S.,
especially for high-end properties. The shortage of homes on the
market is also affecting home shoppers around the country. The
number of active listings on Realtor.com was down 52% from a year
earlier in the week ended May 1. ( News Corp, parent of The Wall
Street Journal, operates Realtor.com.)
"The record-high home prices are happening across nearly all
markets, big and small, even in those metros that have long been
considered off-the-radar in prior years for many home seekers,"
said Lawrence Yun, NAR's chief economist. "With low inventory
already impacting the market, added skyrocketing costs have left
many families facing the reality of being priced out entirely."
Many of the metro areas that posted the strongest price
increases in the first quarter were vacation destinations, as
second-home demand surged during the pandemic and continues to
remain robust. The biggest gainer was Kingston, N.Y., with a 35.5%
median-price increase from a year earlier. Kingston is in New
York's Hudson Valley, where many city dwellers temporarily or
permanently relocated in the past year.
Following Kingston was the Bridgeport, Conn., metro area, up
34.3%, and Atlantic City, N.J., up 34%.
The only metro area to post a decline in the first quarter from
a year earlier was Springfield, Ill., where median prices fell
2.4%, the NAR said.
Nationwide, the median existing-home sales price rose 16.2% in
the first quarter to $319,200, a record high in data going back to
1989, NAR said.
Prices are rising so rapidly they are outweighing the benefit of
rock-bottom borrowing rates. In the first quarter, the typical
monthly mortgage payment rose to $1,067, from $995 a year earlier,
the NAR said, even as mortgage rates declined.
Economists say the pace of price increases is likely to slow
later in the year as more people are priced out of the market. But
in many metro areas, demand would still exceed the available supply
even if some buyers dropped out, real-estate executives say.
"Despite an 11% increase in our average sales price over the
last year, demand for our homes has never been higher," said Eric
Lipar, chief executive of home builder LGI Homes Inc., in an
earnings call this month.
Write to Nicole Friedman at email@example.com
(END) Dow Jones Newswires
May 11, 2021 12:04 ET (16:04 GMT)
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