Home prices sustained their strength, while affordability also improved as the monthly share of income needed for payments dropped closer to a key benchmark, according to research from the National Association of Realtors.
The median price nationwide rose 3.1% on an annual basis to $418,700 in the third quarter, decelerating from the
"Home prices remain on solid ground as reflected by the vast number of markets experiencing gains," said NAR Chief Economist Lawrence Yun, in a press release.
"Even with the rapid price appreciation over the last few years, the likelihood of a market crash is minimal," Yun added.
On the other end, 13% of metropolitan areas, comprising 29 markets, saw home values decline in the third quarter. The share increased from 10% in the second quarter.
With research regularly showing the high cost of housing weighing on the minds of U.S. consumers, households saw some
"Housing affordability has been a challenge, but the worst appears to be over," Yun said. "Rising wages are outpacing home price increases. Despite some short-term swings, mortgage rates are set to stabilize below last year's levels. More inventory is reaching the market."
First-time buyers, though, typically needed to devote 38% of income on mortgage payments, but the share was down from 40.6% in one quarter prior. NAR considers principal and interest payments that require more than 25% of income unaffordable.
Recent surges in mortgage rates may threaten some of the near-term affordability outlook, with the 30-year weekly average
In 42.5% of markets, a family would need qualifying income of $100,000 to make a 10% down payment on a mortgage, NAR also found. A $50,000 income would suffice in just 2.2% of the country.
The Northeast and Midwest outpaced the rest of the country in annual home price growth, rising by 7.8% and 4.3%, respectively. Smaller gains occurred in the West and South, where housing costs increased by 1.8% and 0.8%. The South reported the biggest share of single-family existing-home sales at 45.1% in the most recent quarter.
Of the 10 cities seeing the fastest pace of price growth, nine were located in the Northeast or Midwest, led by Racine, Wisconsin, with a 13.7% gain. Four Illinois markets ranked in the top 10.
The most expensive markets, though, were located in the West, with California taking eight out of the leading 10 spots. Leading the country again was San Jose, where a median priced home sold for $1.9 million. Trailing the Silicon Valley hub was Anaheim and San Francisco at $1.4 million and $1.31 million.
The surge in prices has brought homeowners $147,000 in increased equity over the last five years, Yun said. The growth in equity levels could also be playing a role in reduced distress among borrowers.
"Distressed property sales and the number of people defaulting on mortgage payments are both at historic lows," he said.
