Despite some signs of a cooling market in recent weeks, recent data from the National Association of Realtors indicates a rise in home prices throughout the country in the second quarter. Demand continues to outstrip supply, driving up median home prices.
A recent report by the National Association of Realtors showed that the median price of an existing single family home had risen over the last year in 182 out of the 183 metro areas surveyed. As of the second quarter of 2021, the median home-price was up 22.9% from the same period last year. 94% of the cities experienced a jump in the median price of 10% or more.
The South and West saw the greatest increase in price. Although the city with the greatest price increases was Pittsfield, Massachusetts, the biggest jumps were seen in Sunbelt states like Arizona, Florida, and Texas. In the Austin, Texas, metro the median home price was up 45.1% year over year, while in Naples, Florida, it went up 41.9%. These metros saw the second and third highest year over year price increases respectively.
Most experts agree that the key issue remains low inventory. Many homes have not been listed due to concern over the state of the market. Many would be sellers without a home to move into are sticking with what they have instead of getting involved in the frantic bidding wars and other stresses of buying in this environment. The continuing specter of COVID-19 has also caused some uncertainty among homeowners.
Thus, low inventory is continuing to push up the price of homes. In fact, the current low interest rates are actually not making much of a difference for many homebuyers. The NAR reported that the typical mortgage payment in the second quarter of 2021 was up to $1,215/month from $1,019/month a year prior. This has occurred even as mortgage rates declined, due to the increasing price of homes. Thus, many homebuyers or would be homebuyers are not receiving any benefit from the historically cheap mortgages.
Indeed, an unusually high number of home sales do not involve mortgages at all. In July, Redfin reported that 30% of home sales in the U.S. between January, 2021 and April, 2021 were purchased entirely with cash. This is the highest percentage of cash home purchases recorded since 2014.