Approximately nine out of 10 metro markets registered home price gains in the fourth quarter of 2022, according to the National Association of Realtors (NAR). However, only 18% of the 186 tracked metro areas registered double-digit price increases, down from 46% in the third quarter of 2022.
The national median single-family existing-home price rose 4% year-over-year to $378,700; in the third quarter, the year-over-year price appreciation was 8.6%. Half of the top 10 most expensive markets were in California.
“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years,” NAR Chief Economist Lawrence Yun said, noting these costs increases have far surpassed wage increases and consumer price inflation of 15% and 14%, respectively, since 2019. “Far fewer metro markets experienced double-digit price gains in the latest quarter.”
While home prices continue to rise, affordable homeownership opportunities remain scarce in many areas. According to the Housing Opportunity Index published by the National Association of Home Builders (NAHB) and Wells Fargo (NYSE:WFC), only 38.1% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $90,000. This marks the third straight quarterly record low for housing affordability since the Great Recession, trailing the previous mark of 42.2% in the third quarter and 42.8% set in the second quarter.
“Rising mortgage rates, supply chain disruptions, elevated construction costs and a lack of skilled workers and lots all contributed to a declining housing market and worsening affordability conditions going back to the second quarter of last year,” said NAHB Chairman Alicia Huey, a custom home builder from Birmingham, Alabama. “But we are anticipating a better affordability climate in the months ahead, with mortgage rates already posting a modest drop since the beginning of the year and expectations that the Federal Reserve will end its latest string of interest rate hikes by the end of the first quarter.”
