WASHINGTON–In news that will not surprise CU members who are home shopping or CUs themselves that offer mortgages, U.S. home prices rose nearly everywhere in the first quarter.
The median sales price for existing single-family homes was higher in Q1 compared with a year earlier for 182 of the 183 metro areas tracked by the National Association of Realtors, which further reported that in 89% of those metro areas, median prices rose by more than 10% from a year earlier.
“This week’s price data was the latest confirmation that the pandemic continues to reshape how and where many Americans want to live,” noted the Wall Street Journal. “Remote work prompted buyers to seek out more space, while pandemic-related restrictions made vacation houses more desirable, real-estate agents said.”
With low mortgage rates also fueling the boom, many first-time homebuyers have found themselves priced out of the market.
Compounding the challenge for home shoppers, the number of active listings on Realtor.com was down 52% from a year earlier in the week ended May 1.
The Forecast
“The record-high home prices are happening across nearly all markets, big and small, even in those metros that have long been considered off the radar in prior years for many home seekers,” Lawrence Yun, the NAR’s chief economist, told the Journal.
With brokers describing the current market as “frenzied,” the Journal reported economists are predicting the pace of price increases is likely to slow later in the year and next as more people are priced out of the market, especially if mortgage rates tick higher.
Mortgage-finance company Fannie Mae is forecasting median existing-home prices to rise 11.5% in 2021, then slow to a 4% increase in 2022, the Journal noted.
One Market Declines
There is some good news for homebuyers in one city, Springfield, Ill, which was the only metro area to post a decline in the first quarter from a year earlier, with median prices falling 2.4%.
Nationwide, the median existing-home sales price rose 16.2% in the first quarter to $319,200, a record high in data going back to 1989, NAR said. NAR data also show the typical monthly mortgage payment rose to $1,067, from $995 a year earlier.