Following an ongoing trend, limited inventory has continued to plague the housing market, slowing sales of moderately priced homes increasing prices in metro areas, according to the latest quarterly report from the National Association of Realtors.
“Though inventory is more than adequate on the upper-end market, the insufficient supply of low to mid-priced homes in metro markets with strong job growth continues to drive up prices and push prospective buyers out of the market,” said NAR Chief Economist Lawrence Yun.
Nationally, the median price for existing single-family homes rose 4.8 percent in Q3 2018, up to $266,900 year over year, from Q3 2017’s median price of $254,700.
“A strong economy and consistent job growth should be driving up home sales; however, would-be homebuyers are struggling to find a home they can afford,” said Yun. “As mortgage rates continue to rise, reaching the decade’s highest rates this quarter, an increase in the supply of affordable homes has become even more important to help temper price growth across the country.”
According to NAR, the national housing inventory increased by 1.1 percent year over year in Q3 2018, to 1.88 million, up from 1.86 million in 2017. Supply is expected to last a little longer too, up to 4.3 months from 4.2 months in Q3 2017.
NAR also notes that despite increases in income across the country, affordability has decreased, due to higher mortgage rates and higher home prices. To make a five percent down payment on a home at the national median home price, a buyer would need an income of $64,480, and a 10 percent down payment would require an income of $61,086.
“Aspiring middle-class home buyers continue to face affordably issues, as buyers are increasingly being priced out in the West while the rest of the country struggles, too,” said Yun. “The market desperately needs homebuilders to begin constructing more moderately priced single-family home and condominiums to help satisfy demand and mitigate rapid price growth.”
Find the full report from NAR here.