Stop us if you’ve heard this before: Stout demand and short for-sale inventory continue to push median home sales prices up — and in some cases, up by a lot.
It’s a familiar refrain by now, but the market keeps sizzling even as the rate of price acceleration begins to taper, according to the latest quarterly report from the National Association of Realtors (NAR). Per the trade group’s data, the median sales price of an existing single-family home rose by 16% year over year to $363,700 as of third-quarter 2021. That’s down from 22.9% annualized growth in the second quarter, but price growth remains elevated as buyers continue to grapple with rival house hunters for limited supply.
“While buyer bidding wars lessened in the third quarter compared to early 2021, consumers still faced stiff competition for homes located in the top ten markets,” said Lawrence Yun, NAR’s chief economist. “Most properties were only on the market for a few days before being listed as under contract.”
Median sales prices rose annually in all but one of the 183 markets tracked by NAR. In 78% of these markets, prices spiked by a double-digit percentage year over year. In three metro areas, prices surged yearly by more than 30%.
These numbers, however, are moderating. Consider that, in the previous quarter, 94% of metros saw annual price gains of 10% or more, and 12 metros had gains of more than 30%.
“Home prices are continuing to move upward, but the rate at which they ascended slowed in the third quarter,” Yun said. “I expect more homes to hit the market as early as next year, and that additional inventory, combined with higher mortgage rates, should markedly reduce the speed of price increases.”
The three markets with the highest year-over-year price jumps in Q3 2021 were Austin (33.5%); Naples-Immokalee-Marco Island, Florida (32%); and Boise (31.5%). The most expensive markets in the third quarter were San Jose (median price of $1,650,000); San Francisco ($1,650,000); and Anaheim-Santa Ana-Irvine, California ($1,100,000).
Assuming a 20% downpayment on a 30-year fixed-rate loan, the average monthly mortgage payment on an existing home increased to $1,214 in the third quarter, up by $156 year over year. The average mortgage rate in the third quarter decreased by 9 basis points from a year ago to 2.92%, but the typical monthly payment still went up due to the median price of an existing home climbing by $50,300 during this time.