Across the country, 70% of metro areas experienced double-digit home price gains in the first quarter, according to a new report from the National Association of Realtors.
Prices for existing single-family homes in the U.S. were up 15.7% year over year at a median $368,200 in the first quarter. Dallas-Fort Worth homes were up 21.8% to $365,400, NAR reported. The South region made up 45% of sales in the first few months of the year.
“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” NAR’s chief economist Lawrence Yun said in the report. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”
Yun said he expects more homes to come onto the market as the year progresses, easing the nation’s record-low inventory. Mortgage rates soared past 5% in April, which could affect buying activity.
“I expect more pullback in housing demand as mortgage rates take a heavier toll on affordability,” Yun said. “There are no indications that rates will ease anytime soon.”
The largest annual home price hikes last quarter were seen in the Punta Gorda (34.4%) and Ocala (33.8%) areas in Florida, followed by Ogden-Clearfield, Utah (30.8%), and Lakeland-Winter Haven, Fla. (30.1%).
“Price gains in many smaller, tertiary cities are now outpacing those in the more expensive primary and secondary markets,” Yun said. “This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home, making relocation to smaller markets possible.”
In Texas, home prices increased the most in Austin, where they were up 23.5% to $540,700. Prices were up 20.4% in San Antonio and 17.4% in Houston.
Price appreciation and higher mortgage rates worsened affordability, NAR found. The organization said families spent 18.7% of their incomes on mortgage payments in the first quarter, with first-time buyers spending 28.3% of their family incomes on payments. NAR said it considers a mortgage unaffordable if the payment amounts to more than 25% of the family’s income.
“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Yun said.
