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Strong Demand Drives Q1 Prices Upward YoY

Nearly every metro area tracked by the National Association of Realtors (NAR)—99%—recorded year-over-year price increases in Q1 of 2021.

The 11 metro areas with the highest price increases saw median sales prices ranging from the $100,000s to $600,000s included:

  • Kingston, New York (35.5%; $303,100)
  • Bridgeport-Stamford-Norwalk, Connecticut (34.3%; $580,400)
  • Atlantic City-Hammonton, New Jersey (34.0%; $277,200)
  • Barnstable Town, Massachusetts (33.1%; $567,600)
  • Boise City-Nampa, Idaho (32.8%; $422,600)
  • Sherman-Denison, Texas (29.8%; $234,800)
  • Elmira, New York (29.1%; $126,900)
  • Austin-Round Rock, Texas (28.2%; $437,900)
  • Youngstown-Warren-Boardman, Ohio-Pennsylvania (27.7%; $119,500)
  • Decatur, Illinois (27.5%; $102,400)
  • Glens Falls, New York (27.5%; $214,600)

"Significant price increases throughout the country simply illustrate strong demand and record-low housing supply," said Lawrence Yun, NAR Chief Economist. "The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off-the-radar in prior years for many home seekers."

Partially contributing to this price hike is the rising cost of materials. According to a recent study from the National Association of Home Builders (NAHB), the price of lumber has tripled over the past year, forcing the price of a new single-family home to rise $35,872 on average.

Nearly 90% of metro areas (163 metro areas out of 183) registered double-digit price growth. For comparison, 25% of metro areas (46 out of 181) saw such growth in 2020's Q1 when housing inventory was at a healthier level of 3.3 months, which better matched the pace of monthly demand.

"The sudden price appreciation is impacting affordability, especially among first-time home buyers," said Yun. "With low inventory already impacting the market, added skyrocketing costs have left many families facing the reality of being priced out entirely."

The most expensive markets also continued to experience double-digit price growth, including:

  • San Jose-Sunnyvale-Santa Clara, California ($1.5 million; 11.1%)
  • San Francisco-Oakland-Hayward, California ($1.2 million; 21.8%)
  • Anaheim-Santa Ana-Irvine, California ($1 million; 14.3%)
  • Urban Honolulu, Hawaii ($940,400; 19.2%)
  • San Diego-Carlsbad, California ($763,500; 14%)
  • Boulder, Colorado ($726,600; 16.7%)
  • Los Angeles-Long Beach-Glendale, California ($682,400; 15.1%)
  • Seattle-Tacoma-Bellevue, Washington ($653,400; 17.9%)
  • Naples-Immokalee-Marco Island, Florida ($599,500; 24.9%)
  • Nassau County-Suffolk County, New York ($598,600; 22.7%)

Nationally, median existing-home sales prices rose 16.2% on a year-over-year basis to $319,200, a record high since 1989. All regions recorded double-digit year-over-year price growth, with the Northeast seeing a 22.1% increase, followed by the West (18.0%), South (15.0%) and Midwest (14.4%).

"These higher home prices underscore the importance of stepping up housing supply," Yun said. "An increase of inventory—either by new construction or by converting abandoned and unused retails or hotels—would combat the affordability problem."

Higher prices mean seller’s a padding their pockets with extra profit, as ATTOM Data Solutions recently reported that the typical Q1 home sale generated a profit of $70,050 nationwide, down from $75,750 in Q4 of 2020, but still up 26% from $55,750 in Q1 of 2020.

The average national monthly mortgage payment rose to $1,067, up from $995 just one year ago. This increase exists even as the effective 30-year fixed mortgage rate continues to loom under the 3% mark. In Q1, families with a median income of $90,547 spent 14.1% of that income on mortgage payments on average, with a 20% down payment and a 30-year fixed mortgage (14.5% one year ago). Nationally, a family typically needed an income of $51,216 to pay a 30-year fixed-rate mortgage with a 20% down payment ($47,760 one year ago). In 68% of the measured markets (125 of the 183 metro areas), a family needed less than $50,000 to afford a home.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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