With home inventory available for sale nearing an all-time low, the price of properties during the first three months of the year jumped 5.7%, according to the National Association of Realtors (NAR). During the first quarter of 2018, the national median price for a single-family home was $245,500, marking a 5.7% increase from the first quarter of 2017, when the median price was $232,200. During the fourth quarter of 2017, the median price jumped 5.3% compared with the year earlier.
"The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets," said Lawrence Yun, NAR chief economist, in a press release announcing the results. "Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds."
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According to the economist, in markets that have strong employment, consumers are reporting increased frustration in purchasing a home. A lack of affordable properties on the market is resulting in bidding wars that are shutting many buyers out of the homebuying process altogether. According to NAR, total existing home sales, including single-family homes and condos, slipped 1.5% to a seasonally adjusted rate of 5.51 million in the first quarter from 5.59 million in the fourth quarter. On a year-over-year basis, the number of available homes is down 1.7%. At the end of the first quarter, NAR said that there were 1.67 million houses for sale, which is 7.2% lower than the first quarter of 2017, when 1.80 million houses were on the market.
At the same time that home prices are moving higher, so are mortgage rates, hurting would-be homebuyers even as the national family median income rose to $74,779 in the first quarter. "Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018," said Yun. "Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger paychecks following this year's tax cuts. It's simple: homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability."
NAR found that the five most expensive housing markets were San Jose, California; San Francisco-Oakland-Hayward, California; Anaheim-Santa Ana-Irvine, California; urban Honolulu; and San Diego-Carlsbad, California. The five cheapest cities are Decatur, Illinois; Cumberland, Maryland; Youngstown-Warren-Boardman, Ohio; Elmira, New York; and Binghamton, New York.