While 67% of metro areas in NAR’s 4Q report saw double-digit price growth, it’s down a bit from 78% in 3Q; two Fla. metros rank at the top for rising prices.
WASHINGTON – The fourth quarter of 2021 saw home prices continue to increase, although at a slower pace. Even though two out of three metro areas saw double-digit price growth in the fourth quarter (4Q) of 2021, it’s down from about four out of five one quarter earlier.
According to the latest quarterly report from the National Association of Realtors® (NAR), 67% of metros (183 measured markets) saw double-digit price appreciation compared to 78% in the prior quarter. Nationally, the median single-family existing-home price rose at a slower rate of 14.6% year-over-year to $361,700 compared to the year-over-year pace in the previous quarter (15.9%).
In addition, all regions had double-digit price gains in 3Q 2021, but only the South (which includes Florida) had double-digit price appreciation (17.9%) in 4Q. The Northeast (6.8%), Midwest (8.6%) and West (7.7%) saw prices rise less than 10%.
“Homebuyers in the last quarter saw little relief as home prices continued to climb, albeit not as fast as earlier in the year,” says Lawrence Yun, NAR chief economist. “The increasing prices are indicative of a seller’s market, with an abundance of eager buyers and very limited supply.”
Metros in the Sunbelt and Mountain states topped the list of areas with the highest yearly price gains:
- Punta Gorda, Fla. (28.7%)
- Ocala, Fla. (28.2%)
- Austin-Round Rock, Texas (25.8%)
- Phoenix-Mesa-Scottsdale, Ariz. (25.7%)
- Sherman-Denison, Texas (25.1%)
- Tucson, Ariz. (24.9%)
- Las Vegas-Henderson-Paradise, Nev. (24.7%)
- Ogden-Clearfield, Utah (24.7%); Salt Lake City, Utah (24.4%)
- Boise City-Nampa, Idaho (24.3%)
The top 10 most expensive markets in the fourth quarter also saw prices surge, with nine of them doing so by double-digits. California led the way with five metros in the top 10, along with five other areas, including:
- San Jose-Sunnyvale-Sta. Clara, Calif. ($1,675,000; 19.6%)
- San Francisco-Oakland-Hayward, Calif. ($1,310,000; 14.9%)
- Anaheim-Santa Ana-Irvine, Calif. ($1,150,000; 23%)
- Urban Honolulu, Hawaii ($1,054,500; 16.8%)
- San Diego-Carlsbad, Calif. ($845,000; 14.2%)
- Los Angeles-Long Beach-Glendale, Calif. ($797,900; 15.9%)
- Boulder, Colo. ($775,100; 17.2%)
- Seattle-Tacoma-Bellevue, Wash. ($700,000; 13.9%)
- Naples-Immokalee-Marco Island, Fla. ($685,000; 21.2%)
- Nassau County-Suffolk County, N.Y. (644,600; 9%)
“The strength of price gains is associated with the strength of the local job market, but the escalating prices took a toll on home shoppers, compelling many to come up with extra cash and forcing others to delay making a purchase altogether,” says Yun. “A number of families, especially would-be first-time buyers, are increasingly being forced out of the market, and this is why supply is critical to expanding homeownership opportunity.”
Affordability worsened in the fourth quarter year-to-year, and the threat of rising mortgage rates created even more uncertainty.
In the fourth quarter, the average monthly mortgage payment on an existing single-family home –valued at $361,700 and financed with a 20% down payment, 30-year loan at a mortgage rate of 3.13% – rose to $1,240, an increase of $201 from one year ago. Families typically spent 16.9% of their income on mortgage payments; one year ago, families spent 14.7%.
During this same period, a home purchase was unaffordable for a typical first-time buyer. The typical mortgage payment on a 10% down loan for a typical starter home valued at $307,400 increased to $1,224, a rise of $198 year-to-year. First-time buyers generally spent 25.6% of their household income on mortgage payments, making a home purchase unaffordable. A mortgage is considered affordable if its payment (principal and interest) amounts to 25% or less of a family’s income.
“The good news is that home prices should begin to normalize later in 2022 as more homes come on the market,” says Yun.
In 20 markets where the median home sales price ranged from $537,400 to $1.675 million, a family needed more than $100,000 to afford a 10% down payment mortgage (17 markets in the previous quarter).
Conversely, in 81 other markets – where the median sales price was at least $267,700 or less – a family needed less than $50,000 to afford a home (83 markets in the prior quarter). In 12 metro areas where the median home sales price was less than $160,000, a family generally needed less than $30,000 to purchase a home.
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