In Q2 2023, around 60% of metro markets (128 out of 221) saw home price gains as mortgage rates shifted between 6.28% and 6.71%, per the latest National Association of REALTORS® report. About 5% of these areas recorded double-digit price hikes, down from 7% in Q1. NAR Chief Economist Lawrence Yun noted reduced affordability challenges due to moderating or falling home prices amidst rising jobs and incomes.
Compared to a year ago, the national median single-family existing-home price decreased 2.4% to $402,600, following a 0.2% drop in the prior quarter. Despite this, local market variations remain substantial.
In Q2, the South led with 46% of single-family home sales, experiencing a 2.2% price decline. The Northeast and Midwest saw prices rise by 3.2% and 1.4%, respectively, while the West saw a 5.8% retreat.
Notable price drops in Q2 from a year ago included 19.1% in Austin, 11.3% in San Francisco, 9.6% in Salt Lake City, and 7.4% in Las Vegas. Yun pointed out that job-rich markets saw price corrections, with signals of stabilizing prices due to job and wage gains.
The top 10 metro areas with the highest year-over-year price increases saw gains of at least 10.4%, mainly in the Midwest. Seven of California’s priciest U.S. markets were in San Jose, San Francisco, and San Diego.
About 41% (90 of 221) of markets experienced price declines, up from 31% in Q1. Affordability worsened due to rising home prices and mortgage rates. The monthly mortgage payment on a typical single-family home with a 20% down payment increased 10% to $2,051 from the previous quarter, with first-time buyers also facing higher costs.
Lack of inventory and affordability continued to impact first-time buyers during the second quarter. For a typical starter home valued at $342,200 with a 10% down payment loan, the monthly mortgage payment grew to $2,012, up 9.9% from the previous quarter ($1,830). That was an increase of more than $200, or 11.3%, from one year ago ($1,807). First-time buyers typically spent 40.7% of their family income on mortgage payments, up from 37.1% in the prior quarter.
A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 40.3% of markets, up from 33% in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 6.3% of markets, down from 10% in the previous quarter.
