The national median existing single-family home price rose to a new high in the second quarter of this year, reaching $269,000, according to the National Association of Realtors’ (NAR) quarterly report, on the housing market released on Wednesday. And this new peak for home prices is about the only new thing NAR had to report for the quarter.
Other than that, things look quite the same as the previous quarter—rising prices, scant inventory, waning affordability.
After prices rose 5.3 percent over the year in the second quarter, NAR Chief Economist Lawrence Yun said, “The ongoing supply crunch affecting most of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings.”
And he stated, “Solid economic growth, a healthy labor market, and the large millennial population should be driving home sale much higher.”
So just how bad is this persistent supply/inventory crunch? In the second quarter of the year, there was 4.1 months’ supply of homes on the market, down from 4.2 months’ supply a year earlier. A balanced market holds six months’ supply.
NAR reported 1.95 million existing homes for sale in the second quarter, 0.5 percent above the amount recorded a year earlier.
With supply tight, prices rose in 90 percent of major metros, increasing in 161 out of the 178 markets NAR tracks. Of those, 24 recorded double-digit gains.
These climbing prices amid increasing mortgage rates are dampening affordability, particularly for middle-class Americans, according to NAR.
What can be done? Yun said: “Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand. Local governments need to acknowledge this glaring issue and ease some of the zoning laws, permitting processes and regulations that are slowing construction.”
After the second-quarter price gains, two metros now chart median home prices in the $1 million range—San Jose, California, at $1.4 million and San Francisco-Oakland-Hayward, California at $1.1 million. The other most expensive metros in the nation were Anaheim-Santa Ana-Irvine, California, $830,000; urban Honolulu, $795,200; and San Diego-Carlsbad, $645,000.
At the other end of the spectrum, Youngstown-Warren-Boardman, Ohio, charted the lowest median single-family home price at just $94,400, followed by Cumberland, Maryland, $94,900; Decatur, Illinois, $96,900; Elmira, New York, $106,300; and Erie, Pennsylvania, $121,700.
Yun did offer a little hope for home sales moving through the second half of the year; however, it is hinged on an increase in supply. “As long as economic conditions maintain current levels, there’s still a chance for sales to break out this year. However, with mortgage rates trending higher, it will only happen if supply levels improve enough to cool the speedy price growth in a majority of the country,” he said.