Metro Home Prices Rise in 96% of Metro Areas in First Quarter of 2020

WASHINGTON, DC—Nearly all of the nation’s metro areas saw price growth and had minimal inventory increases in the first quarter of 2020, according to the latest quarterly report by the National Association of Realtors®.

Median single-family home prices increased year-over-year in 96% of measured markets in the first quarter, with 174 of 181 metropolitan statistical areas showing sales price gains. That is an increase from the 94% share seen in the fourth quarter of 2019. The national median existing single-family home price in the first quarter of 2020 was $274,600, up 7.7% from the first quarter of 2019 ($254,900).

Forty-six metros, mostly in the West and South regions, saw prices increase by double-digits. These areas include Boise City, Idaho (18.1%), Eugene, Ore. (14.5%) and Colorado Springs, Colo. (14.4%), among others.

“The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic,” said Lawrence Yun, NAR chief economist. “Even now, due to very limited listings, home prices are showing no signs of buckling.”

In March, the median sales price of existing homes rose 8% on a year-over-year basis. Yun says the strong desire for housing, paired with the dire inventory totals contributed to higher home prices. “Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers,” he said. “More supply and more listings are needed to provide a faster recovery for the economy.”

At the end of last quarter, 1.50 million existing homes were available for sale, 10.2% lower than total inventory at the end of 2019’s first quarter. As of March 2020, housing inventory totals were equivalent to 3.4 months at the current sales pace.

Metro areas that were already deemed the most expensive also saw price jumps in the first quarter. In the West region, median sales prices increased from one year ago in San Jose, Calif. ($1,350,0000; 10.7%); San Francisco, Calif. ($985,000; 5.9%); Anaheim, Calif. ($875,000; 9.4%); San Diego, Calif. ($670,000; 8.1%); Boulder, Colo. (622,600; 3.1%); Los Angeles, Calif. ($592,800; 8.1%) and Seattle, Wash. ($554,400; 11.5%).

“The fast-rising home prices are not healthy, so more homebuilding needs to take place as the economy begins to reopen,” said Yun. “Mortgage rates are at historic lows and those with secure employment will be attracted to the market.”

Metro areas with year-over-year price declines were marginal, with decreases less than 3%. Those areas include, among others, Bloomington, Ill. (-1.8%); Shreveport-Bossier City, La. (-2.1%) and Bowling Green, Ky. (-2.7%).

Median single-family sales prices were higher across all regions compared to one year ago. The Northeast saw a rise of 9.7%, while the Midwest, the South and the West each had an individual increase of 7.5%.

Lower Mortgage Rates Led to Better Home Affordability

Lower mortgage rates made home purchases more affordable in both 2019 and in the first quarter of 2020. The 30-year fixed-rate averaged 3.57% in the first quarter of 2020, down from 4.62% one year ago. The average monthly mortgage payment on a 30-year fixed-rate mortgage with a 20% down payment was $995, down from $1,048 a year ago. This is equivalent to 15% of the median family income of $79,662, down from 16.1% one year ago. (Housing expenses are considered a cost burden if the cost is more than 30% of income.)

To afford a typical mortgage payment, a given family needs to spend no more than 25% of income on its mortgage payment (for a 30-year fixed-rate mortgage with a 20% down payment). The income that is needed for this scenario decreased to $47,760, down from $50,304 one year ago.

In 135 of the 181 metro areas, a family needed less than $50,000 to afford a home in the first quarter of 2020, assuming a 20% down payment. However, in the most expensive metro areas, a given family needed over $100,000 to afford a home. This was the case in San-Jose-Sunnyvale-Santa Clara, Calif. ($235,179); San Francisco, Calif. ($171,593); Anaheim, Calif. ($152,431); Urban Honolulu, Hawaii ($137,414); San Diego, Calif. ($116,718); Boulder, Colo. ($108,461) and Los Angeles, Calif. ($103,270).

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