Home price story different depending on where you live.
In the first quarter of 2023, existing-home sales prices climbed in 152 out of 221 metro areas, approximately 70%. But despite that news, the national average home price actually decreased by 0.2% from one year ago, according to a report from the National Association of Realtors® (NAR). The national median single-family home price registered at $371,200 from January to March, traditionally a slow time for home sales.
Home prices climbed based on an active quarter of home sales in the South, where 46% of all the nation’s home sales occurred. The Midwest also registered positive prices momentum, while the Northeast and Midwest trended down.
- Northeast: Down 0.1%
- Midwest: Up 2.9%
- South: Up 1.4%
- West: Down 5.2%
"Generally speaking, home prices are lower in expensive markets and higher in affordable markets, implying greater mortgage rate sensitivity for high-priced homes," said NAR Chief Economist Lawrence Yun.
Accounting for the disparity
The differences in home price appreciation seem to boil down to the markets that saw great price growth over the last few years coming back down to earth. Cities like San Francisco, San Jose and Reno experienced home price drops of at least 10% year-over-year, while on the flip side, cities like Milwaukee, Dayton and Oklahoma City saw price gains of at least 10%.
As an example of this, let’s take a look at two extreme cases. "Home prices are also lower in cities that previously experienced rapid price gains," Yun added. "Home prices grew an astonishing 67% in three years in Boise City and Austin through 2022. The latest price reductions in these areas have improved housing affordability and led to some buyers returning given the sustained, rapid job creation in their respective markets."
Year-over-year, home prices declined 13.5% in Austin and 10.3% in Boise in the first quarter.
Inventory remains a concern
While drops in home prices are good news for potential homebuyers, particularly first-time homebuyers who don’t have equity tied up in their home, the lack of homes for sale strikes a cautionary tone when looking at the spring and summer markets. Inventory in the first quarter averaged 1,630,000 listings. This is 40% lower than the first quarter or 2019, before the pandemic hit and home buying increased.
"Due to the intense housing inventory shortage, multiple offers are returning, especially on affordable homes," Yun said. "Price declines could be short-lived."
This could lead to more bidding wars, so it’s important you take the necessary steps to be the best homebuyer you can be. The first step: get pre-approved for a mortgage.
Where home prices are moving
Home price gains were most notable in lower population metro areas, mainly in the South and upper Midwest. All the top movers had double digit percentage point price gains.
Top 10 metro areas with largest year-over-year price increases:
- Kingsport-Bristol-Bristol, Tenn.-Va. (18.9%)
- Oshkosh-Neenah, Wis. (16.5%)
- Warner Robins, Ga. (16.2%)
- Burlington, N.C. (14.7%)
- Elmira, N.Y. (14.7%)
- Oklahoma City, Okla. (14.7%)
- Milwaukee-Waukesha-West Allis, Wis. (13.7%)
- Appleton, Wis. (12.4%)
- Hickory-Lenoir-Morganton, N.C. (12.0%)
- Santa Fe, N.M. (11.7%)
Many of the metro areas that are the most expensive saw price depreciation, with only one of the top 10 registering a gain. Not surprisingly, this was the only metro area in the top 10 that is also in the South.
Top 10 most expensive markets in the U.S., with average price change this quarter:
- San Jose-Sunnyvale-Santa Clara, Calif. ($1,618,400; -13.7%)
- Anaheim-Santa Ana-Irvine, Calif. ($1,195,500; -5.1%)
- San Francisco-Oakland-Hayward, Calif. ($1,192,600; -14.5%)
- Urban Honolulu, Hawaii ($1,029,000; -8.8%)
- San Diego-Carlsbad, Calif. ($880,000; -2.8%)
- Salinas, Calif. ($863,900; -6.8%)
- San Luis Obispo-Paso Robles, Calif. ($850,200; -3.8%)
- Oxnard-Thousand Oaks-Ventura, Calif. ($844,800; -5.6%)
- Boulder, Colo. ($836,900; -2.6%)
- Naples-Immokalee-Marco Island, Fla. ($777,000; 4.3%)
“A few markets may see double-digit price drops, especially some of the more expensive parts of the country which have also seen weaker employment and higher instances of residents moving to other areas,” Yun notes.
Source: https://www.nar.realtor/newsroom/almost-seven-in-10-metro-areas-posted-home-prices-gains-in-the-first-quarter-of-2023