Sellers experienced a good end to the year in 2019, with 94 percent of markets experiencing price gains in median single-family homes in the fourth quarter, according to the National Association of Realtors.
The association’s quarterly report showed that 170 of the 180 metropolitan statistical areas it examines experienced price gains during that time period. The median price of a single-family home was $274,900 for the quarter.
The share of price gains was up slightly from the previous quarter when 93 percent of measured markets experienced year-over-year gains.
“It is challenging – especially for those potential buyers – where we have a good economy, low interest rates and a soaring stock market, yet are finding very few homes available for sale,” said Lawrence Yun, NAR chief economist in a press release accompanying the latest numbers. “We saw prices increase during every quarter of 2019 above wage growth.”
The median price of single-family homes increased 6.6 percent in the fourth quarter of 2019, representing a faster pace of growth than the 5.1 percent increase in the third quarter of 2019.
Those prices grew faster in Western states at 7.3 percent. Prices grew 6.8 percent in the Midwest, 6.1 percent in the South and 5.8 percent in the Northeast.
The report noted that prices continued to rise even in the most expensive metro areas. Homebuyers would need to make more than $100,000 a year to afford the mortgage payment on a median-priced home in the top 10 most expensive metro areas, according to the report, assuming a 5 percent down payment on a 30-year fixed rate mortgage.
The Midwest region had the least expensive median home prices in the country, at $210,200, putting the minimum qualifying income needed to afford a home at $37,773 with a 20 percent down payment.
The median home price in Chicago was $254,700, which means the minimum income needed for the same loan was $45,770 in the fourth quarter.
Inventory was down in the fourth quarter from the same period in 2018, ending the year with 1.4 million homes available for sale and a 3.5-month supply. That’s 8.5 percent less than the inventory in the fourth quarter of 2018, when a 4-month supply was available.
Declining mortgage rates attracted more first-time homebuyers in the fourth quarter, despite the increase in home prices. NAR noted that a 30-year fixed rate mortgage was an average 3.76 percent in the fourth quarter of 2019, down from 4.95 percent in the fourth quarter of 2018.
For homebuyers, that meant the income necessary to afford a home declined to $48,960 from $52, 896 in Q4 2018.
Meanwhile, median family income jumped to $79,740 at the end of 2019 from $77,093 in the prior year.
First-time buyers got a little bit of a break, according to NAR. The median price of a starter home dropped to $233,800 in the fourth quarter of 2019, and the monthly mortgage payment for homes with a 10 percent down payment decreased to $1,006.