More than 85 percent of metro markets (189 out of 221) registered home price increases in the fourth quarter of 2023 as the 30-year fixed mortgage rate dropped from 7.79 percent to 6.61 percent, according to the National Association of Realtors’ latest quarterly report. Fifteen percent of the 221 tracked metro areas experienced double-digit price gains over the same period, up from 11 percent in the third quarter.
“Homeowners have benefited from housing wealth accumulation. However, many homebuyers have been shocked at high housing costs, with a typical monthly mortgage payment rising from $1,000 three years ago to more than $2,000 last year,” said Lawrence Yun, NAR chief economist. “This doubling in housing costs for recent home buyers is not included in the official consumer price index inflation calculations and contributes to the sense of dissatisfaction about the economy.”
Compared to one year ago, the national median single-family existing-home price grew 3.5 percent to $391,700. In the prior quarter, the year-over-year national median price increased 2.2 percent.
Among the major U.S. regions, the South posted the largest share of single-family existing-home sales (45 percent) in the fourth quarter, with year-over-year price appreciation of 3.2 percent. Prices also climbed 7.3 percent in the Northeast, 4.7 percent in the Midwest and 4.2 percent in the West.
“Sales were restrained due to limited inventory,” Yun said. “But increased homebuilding, along with lower mortgage rates, will not only improve housing affordability but also help bring more homes onto the market in 2024.”
The top 10 metro areas with the largest year-over-year median price increases, which can be influenced by the types of homes sold during the quarter, all recorded gains of at least 14.8 percent.
Eight of the top 10 most expensive markets in the U.S. were in California.
Less than one-fifth of markets (14 percent, 32 of 221) experienced home price declines in the fourth quarter, down from 17 percent in the third quarter.
Housing affordability marginally improved in the fourth quarter on the back of declining mortgage rates. The monthly mortgage payment on a typical existing single-family home with a 20 percent down payment was $2,163, down 1.2 percent from the third quarter ($2,189) but up 10 percent — or $196 — from one year ago. Families typically spent 26.1 percent of their income on mortgage payments, down from 26.7 percent in the previous quarter but up from 24.2 percent one year ago.
Lack of inventory and affordability continued to impact first-time buyers during the fourth quarter. For a typical starter home valued at $332,900 with a 10 percent down payment loan, the monthly mortgage payment fell slightly to $2,120, down 1.2 percent from the prior quarter ($2,146). However, that was an increase of $190, or 9.8 percent, from one year ago ($1,930). First-time buyers typically spent 39.4 percent of their family income on mortgage payments, down from 40.3 percent in the prior quarter.