A whopping 96% of metro areas in the United States saw median single-family home prices rise in the second quarter, the National Association of Realtors (NAR) reported.
The organization’s latest quarterly report revealed that 174 of 181 metropolitan statistical areas posted sales price gains. The share of metros with price gains was unchanged from the first quarter, illustrating that, despite the havoc wreaked on the economy by the COVID-19 pandemic, home prices have largely shown impressive durability.
“Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale,” said NAR chief economist Lawrence Yun. “Historically-low inventory continues to reinforce and even increase prices in some areas.”
The median existing-home price in the second quarter was $291,300 — up 4.2% year over year, though the rate of growth has slowed from the first quarter’s 7.7% pre-pandemic annual pace.
San Jose, California, remained the country’s most expensive metro, with a median price of $1.38 million, up 3.8% from the second quarter of last year. California cities accounted for four of the five most expensive markets, with San Francisco ($1.05 million, unchanged from last year), Anaheim ($859,000, up 2.9%), Honolulu ($815,700, up 3.8%) and San Diego ($670,000, up 2.3%) following San Jose.
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The biggest gains, though, came in less expensive cities, metros with larger suburban compositions and cheaper alternatives to the country’s biggest markets. Fifteen such cities logged double digit year-over-year price growth, from large metros like Memphis (up 13.4%), Indianapolis (10.8%) and Phoenix (10.2%) to more medium-sized cities like Hunstville, Alabama (13.5%); Boise, Idaho (12.6%) and Spokane, Washington (11.8%). Boise, the country’s 33rd most expensive city, had the highest median price among cities with double-digit price growth; no pricier city had price gains above 9%.
“This last quarter showed heavy buyer activity in less occupied areas when compared to highly populated cities such as San Francisco, New York, and Washington, D.C., related in part to the longer shutdowns in these cities,” said Yun. “In the midst of the pandemic, some buyers are looking for housing in less crowded and more affordable metros.”
Despite rising prices, affordability has grown, thanks to historically low mortgage rates. According to the NAR’s data, the monthly payment on a typical purchase financed with a 30-year fixed-rate loan and a 20% downpayment was $1,019 in the second quarter. That’s up slightly from $995 in the first quarter, but still down year over year from $1,078.
“Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago,” Yun said.
