Affordability for first-time buyers is weakening
US home prices rose the most on record in the second quarter as buyers battled for a scarcity of listings.
The median price of an existing single-family home jumped 23% from a year earlier to an all-time high of $357,900, the National Association of Realtors said in a report Thursday. About 94% of 183 metropolitan areas measured had double-digit gains, up from 89% in the first quarter.
Low mortgage rates have stoked the hot US housing market for more than a year, with a shortage of inventory pushing prices ever higher. Buyers are having a hard time finding properties they can afford: Sales of previously owned homes in the US fell for a fourth straight month in May.
“Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year, but are unlikely to be repeated in 2022,” Lawrence Yun, chief economist for the Realtors group, said in the report. “There are signs of more supply reaching the market and some tapering of demand.”
The Northeast region led gains, with a 22% rise. Among metro areas, values rose the most in Pittsfield, a Western Massachusetts town about 40 miles (64 kilometers) from Albany, New York. The median price there was $321,900, up 47% from a year earlier. It was one of 12 areas nationwide with increases of more than 30%.
The only metro area with a decrease was Springfield, Illinois, where prices fell 7%.
The price increases have hit particularly hard for renters looking to become homeowners. Among first-time buyers, the monthly mortgage payment for a loan with 10% down jumped to 25% of income in the second quarter, up from 21% a year earlier, according to the report.
“Housing affordability for first-time buyers is weakening,” Yun said. “Unfortunately, the benefits of historically low interest rates are overwhelmed by home prices rising too fast.”