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NAR: U.S. Metro-Area Homes Sales Rise 96% in 1Q 2020

NAR: U.S. Metro-Area Homes Sales Rise 96% in 1Q 2020

The U.S. had a robust first quarter with little impact yet from the growing pandemic. In almost all metro areas, prices rose and limited inventories barely budged.

WASHINGTON – Nearly all of the nation’s metro areas saw price growth and had minimal inventory increases in the first quarter of 2020, according to the latest quarterly report by the National Association of Realtors® (NAR).

Median single-family home prices increased year-over-year in 96% of measured markets in the first quarter – 174 of 181 metropolitan statistical areas showed sales price gains. That increase is a bit more than just the quarter before. In 4Q 2019, 94% saw a year-to-year price growth.

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The national median existing single-family home price in the first quarter of 2020 was $274,600, up 7.7% year-to-year.

According to NAR, 46 metros, mostly in the West and South regions, saw prices increase by double-digits, including Boise City, Idaho (18.1%), Eugene, Ore. (14.5%) and Colorado Springs, Colo. (14.4%), and some others.

“The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic,” says Lawrence Yun, NAR chief economist. “Even now, due to very limited listings, home prices are showing no signs of buckling.”

In March, the median sales price of existing homes rose 8% year-to-year. Yun says the strong desire for housing paired with dire inventory totals contributed to higher home prices.

“Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers,” he says. “More supply and more listings are needed to provide a faster recovery for the economy.”

At the end of last quarter, 1.50 million existing homes were available for sale – 10.2% lower than total inventory in the previous quarter. As of March 2020, housing inventory totals were equivalent to 3.4 months at the current sales pace. Economists generally consider 6 months to be a balanced market between the number of buyers and the number of sellers.

Metro areas that were already deemed the most expensive also saw price jumps in the first quarter. In the West region, median sales prices increased from one year ago in San Jose, Calif. (10.7%); San Francisco (5.9%); Anaheim, Calif. (9.4%); San Diego (8.1%); Boulder, Colo. (3.1%); Los Angeles (8.1%) and Seattle (11.5%).

“The fast-rising home prices are not healthy, so more homebuilding needs to take place as the economy begins to reopen,” says Yun. “Mortgage rates are at historic lows, and those with secure employment will be attracted to the market.”

Only a few metro areas had year-over-year price declines, and even those were marginal with decreases less than 3%. Those areas include, among others, Bloomington, Ill. (-1.8%); Shreveport-Bossier City, La. (-2.1%) and Bowling Green, Ky. (-2.7%).

Median single-family sales prices were higher across all regions year-to-year in 1Q. The Northeast saw a rise of 9.7%, while the Midwest, the South and the West each had an increase of 7.5%.

Lower mortgage rates led to better home affordability in the final quarter of 2019 and first quarter of 2020. The 30-year fixed-rate averaged 3.57% in the first quarter of 2020, down from 4.62% one year earlier, making the average monthly mortgage payment on a 30-year fixed-rate mortgage (20% down payment) $995 compared to $1,048 one year earlier. It’s the equivalent of 15% of a median family’s income of $79,662 compared to 16.1% one year earlier.

In 135 of the 181 metro areas NAR studies, a family needed less than $50,000 to afford a home in the first quarter of 2020, assuming a 20% down payment. However, in the most expensive metro areas, a given family needed over $100,000 to afford a home.

© 2020 Florida Realtors®

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