More than 85% of metro markets (189 out of 221) registered home price increases in the fourth quarter of 2023 as the 30-year fixed mortgage rate dropped from 7.79% to 6.61%, according to the National Association of REALTORS’ latest quarterly report. Fifteen percent of the 221 tracked metro areas experienced double-digit price gains over the same period, up from 11% in the third quarter.

Benefits

“Homeowners have benefited from housing wealth accumulation. However, many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” said NAR Chief Economist Lawrence Yun in a news release.”This doubling in housing costs for recent home buyers is not included in the official consumer price index inflation calculations and contributes to the sense of dissatisfaction about the economy.”

Compared to one year ago, the national median single-family existing-home price grew 3.5% to $391,700. In the prior quarter, the year-over-year national median price increased 2.2%.

Biggest Numbers

Among the major U.S. regions, the South posted the largest share of single-family existing-home sales (45%) in the fourth quarter, with year-over-year price appreciation of 3.2%. Prices also climbed 7.3% in the Northeast, 4.7% in the Midwest and 4.2% in the West.1

“Sales were restrained due to limited inventory,” Yun said. “But increased homebuilding, along with lower mortgage rates, will not only improve housing affordability but also help bring more homes onto the market in 2024.”

The top 10 metro areas with the largest year-over-year median price increases, which can be influenced by the types of homes sold during the quarter, all recorded gains of at least 14.8%. Those include Dayton, Ohio (19.9%); Kingsport-Bristol-Bristol, Tenn.-Va. (19.2%); Fond du Lac, Wis. (18.6%); Trenton, N.J. (17.3%); Salinas, Calif. (17.1%); Newark, N.J.-Pa. (16.7%); Anniston-Oxford, Ala. (15.7%); Bloomington, Ill. (15.4%); Johnson City, Tenn. (15.2%); and Anaheim-Santa Ana-Irvine, Calif. (14.8%).

Eight of the top 10 most expensive markets in the U.S. were in California. Overall, those markets are San Jose-Sunnyvale-Santa Clara, Calif. ($1,750,300; 11%); Anaheim-Santa Ana-Irvine, Calif. ($1,299,500; 14.8%); San Francisco-Oakland-Hayward, Calif. ($1,251,000; 4.3%); Urban Honolulu, Hawaii ($1,069,400; -1.9%); Salinas, Calif. ($993,900; 17.1%); San Diego-Carlsbad, Calif. ($931,600; 8.7%); Oxnard-Thousand Oaks-Ventura, Calif. ($916,800; 7.9%); San Luis Obispo-Paso Robles, Calif. ($912,100; 5.7%); Los Angeles-Long Beach-Glendale, Calif. ($884,400; 6.7%); and Boulder, Colo. ($849,400; 11.8%).

Less than one-fifth of markets (14%; 32 of 221) experienced home price declines in the fourth quarter, down from 17% in the third quarter.

Affordability Improves

Housing affordability marginally improved in the fourth quarter on the back of declining mortgage rates. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $2,163, down 1.2% from the third quarter ($2,189) but up 10% – or $196 – from one year ago. Families typically spent 26.1% of their income on mortgage payments, down from 26.7% in the previous quarter but up from 24.2% one year ago.

Lack of inventory and affordability continued to impact first-time buyers during the fourth quarter. For a typical starter home valued at $332,900 with a 10% down payment loan, the monthly mortgage payment fell slightly to $2,120, down 1.2% from the prior quarter ($2,146). However, that was an increase of $190, or 9.8%, from one year ago ($1,930). First-time buyers typically spent 39.4% of their family income on mortgage payments, down from 40.3% in the prior quarter.

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 47.1% of markets, up from 45.7% in the previous quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 2.3% of markets, down from 2.7% in the prior quarter.

Data tables for MSA home prices (single-family and condo) are posted at https://www.nar.realtor/research-and-statistics/housing-statistics/metropolitan-median-area-prices-and-affordability. If insufficient data is reported for an MSA in a particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of REALTORS®.

Methodolodgy


1 Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: https://www.census.gov/geographies/reference-files/time-series/demo/metro-micro/delineation-files.html(link is external).

Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.

Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.

NAR began tracking metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989.

The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single-family, townhomes, condominiums, and cooperative housing.

Source: IRS