Key Highlights
- Skyrocketing prices outweighing benefit of low mortgage interest rates
- Median sales prices higher in 182 of 183 metros tracked by National Association of REALTORS®
Far-Flung Boom in Home Sales and Price
Homes are flying off the shelves in most every part of the country. One of the results from this rush to buy? The number of active listings on realtor.com was down -52% from one year ago during the week that ended May 1 2021.
Another result from this rush to buy is that the median sales price of an existing single-family home was higher on a year-over-year basis during Q1 2021 in 182 or 183 metros tracked by the National Association of REALTORS® (NAR).
According to Lawrence Yun, NAR’s chief economist, “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. With low inventory already impacting the market, added skyrocketing costs have left many families facing the reality of being priced out entirely.”
Housing Sectors with Strongest Price Increases in Q1 2021
With second-home demand skyrocketing, vacation destinations across all price tiers in both name brand and relatively unknown vacation destinations saw exceptionally strong price increases.
Smaller, less dense secondary cities also saw scorching home price increases due to off-the-charts demand from city dwellers who either temporarily or permanently relocated.
The top cities seeing the largest home price increases included
- Kingston NY – +35.5% median price increase y/y
- Bridgeport CT – +34.3%
- Atlantic City NJ – +34%
The only metro posting a decline y/y in median home prices during Q1 2021 was Springfield IL. That metro’s decline was -2.4%.
Surging Prices Now Outweighing Benefits of Low Rates
NAR indicated that the median existing home sales price nationwide jumped +16.2% to $319,200 during Q1 2021. This is a record high going back to 1989
Prices have been skyrocketing so quickly they are wiping out the benefit of rock-bottom interest rates. In Q1 2021, NAR indicated that the typical monthly mortgage payment jumped to $1,067 from $995 one year earlier despite lower mortgage rates.
Experts Predicting Price Pace to Slow Later in 2021
Economists far and wide are expecting the pace of price increases to slow during the last half of 2021. Why? Experts indicate that more and more potential buyers are being priced out of the market.
That being said, demand in many metro areas is still expected to outweigh available supply.
Thanks to The Wall Street Journal.
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