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Four out of five major metros posted double-digit home price increases

The drop in sales failed to bring down prices in the second quarter

Home prices and costs concept
Photo (c) Mike Kemp - Getty Images
Rising mortgage rates and falling home sales failed to bring down home prices in the second quarter, according to a new report from the National Association of Realtors (NAR). In fact, four out of five of the largest metro areas recorded year-over-year double-digit price increases.

On a nationwide basis, the NAR puts the median price of a single-family home at $413,000, a 14.2% increase over the second quarter of 2021. NAR Chief Economist Lawrence Yun worries that these types of gains are pricing millions out of the housing market.

"Home prices have increased at a pace that far exceeds wage gains, especially for low- and middle-income workers," Yun said. 

Sales and prices increase most in South

Homes in the South led the nation, both in sales and price increases. The report found that 44% of second-quarter home sales occurred in southern states, and prices rose 18.2%. 

Florida was a major contributor to the South’s numbers. The 10 largest metro areas recorded price appreciation of at least 25%, and seven of those markets are in the Sunshine State.

Lakeland-Winter Haven home prices were up 31.4% in 12 months. Home prices were up 28.9% in Naples-Immokalee-Marco Island; North Port-Sarasota-Bradenton recorded a 28.8% increase; Tampa-St. Petersburg-Clearwater posted a 28.0% price increase; and Cape Coral-Fort Myers home prices increased by 27.8%.

In comparison, prices increased by 12.7% in the West, 10.1% in the Northeast, and 9.7% in the Midwest.

Barriers to home ownership

Yun said the local job market performance and supply availability are two factors that are driving local home price growth. 

"Job growth is positive and should be applauded, but supply restraints are creating unnecessary barriers to ownership opportunities," he noted.

Mortgage rates present another barrier. When rates were around 3%, more people could afford the monthly payments on homes at these prices. According to Bankrate.com, the average 30-year fixed-rate mortgage this week is 5.56%, up from 5.43% last week.

Because of high prices and rising rates, the NAR reports that housing affordability tumbled in the second quarter of 2022. The monthly mortgage payment on a typical existing single-family home with a 20% down payment jumped to $1,841. That's an increase of $444 – or 32% – from the first quarter of this year and a bump of $612 – or 50% – from one year ago. 

With inflation running at 8.5% and pushing up the cost of nearly everything in the economy, it has become even harder to afford a mortgage. According to the NAR report, families typically spent 24.3% of their income on mortgage payments in the second quarter. That's up from 18.7% the prior quarter and 16.9% one year ago.

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