Home prices are still on the rise despite the COVID-19 pandemic, with the “overwhelming majority” of US metro areas posting price gains in the second quarter, according to a report by the National Association of Realtors.
Median single-family home prices rose year over year in 96% of markets measured by NAR in Q2, with 174 out of 181 metro areas posting price gains. That’s identical to the percentage of metro areas posting price gains in Q1, NAR said. The national median price for an existing single-family home was $291,300 in Q2. That was a 4.2% year over year. However, it marked a slower pace or appreciation than the pre-pandemic rate of 7.7% recorded in Q1.
“Home prices have held up well, largely due to the combination of very strong demand for housing and a limited supply of homes for sale,” said Lawrence Yun, chief economist at NAR. “Historically low inventory continue to reinforce and even increase prices in some areas.”
Fifteen metro areas posted double-digit price growth, including Huntsville, Ala. (13.5%), Memphis, Tenn. (13.4%), Boise, Idaho (12.6%), Spokane, Wash. (11.8%), Indianapolis (10.8%), and Phoenix, Ariz. (10.2%).
Yun said that while buyers will continue to be lured into the market by record-low mortgage rates, new homes are needed to satisfy that demand.
“Unless an increasing number of new homes are constructed, some buyers could miss out on the opportunity to purchase a home or have the opportunity delayed,” he said. “In the meantime, prices show no sign of decreasing.”
San Jose, Calif., continued to be the most expensive metro area in the country with a median price of $1.38 million, and posted a year-over-year price gain of 3.8% in the second quarter. San Francisco was in second place, although its median price held steady at $1.05 million, followed by Anaheim, Calif. ($859,000; 2.9% gain), urban Honolulu ($815,700; 3.8% gain), and San Diego ($670,000; 2.3% gain).
“This last quarter showed heavy buyer activity in less occupied areas when compared to highly populated cities such as San Francisco, New York and Washington, D.C., related in part to the longer shutdowns in these cities,” Yun said. “In the midst of the pandemic, some buyers are looking for housing in less crowded and more affordable metros.”