Home prices continued to climb in virtually every corner of the United States during the first quarter as mortgage rates rose rapidly, according to a report released Tuesday by the National Association of Realtors.
Many buyers rushed to lock in their purchases in the first quarter before rates soared even higher, according to real estate agents.
“The housing market remains very active right now,” Nick Bailey, chief executive of Re/Max LLC, said during a Re/Max Holdings Inc. earnings call last week. “Buyers are racing to beat expected mortgage rate hikes.”
The median sales price of existing single-family homes was higher in the first quarter compared to a year ago in 181 of the 185 metro areas tracked by the NAR, the association said Tuesday. The current housing boom has been geographically widespread, with most metropolitan areas across the country showing robust house price growth over the past two years.
Home prices and mortgage rates have climbed simultaneously in recent months, raising costs for homebuyers and prompting some to cut their budgets or walk out of the market. But demand continues to outstrip supply, and a lingering shortage of homes for sale continues to spark bidding wars among buyers and drive prices up.
Nationally, the median selling price of existing single-family homes rose 15.7% in the first quarter from a year ago to $368,200, the NAR reported.
While mortgage rates rose at their fastest pace in 35 years, double-digit price increases persisted across much of the country in the first quarter. Median prices were up at least 10% from a year earlier in 71% of 185 metro areas, an acceleration from the fourth quarter, when 67% of metro areas saw double-digit growth.
The average rate on a 30-year fixed-rate mortgage fell from 3.1% at the end of 2021 to 5.1% last week, near the highest level in more than a decade, according to the financing giant Mortgage Freddie Mac.
Rising house prices and mortgage rates have made home ownership less affordable. In the first quarter, the typical monthly mortgage payment for a single-family home rose to $1,383 from $1,064 a year earlier, the NAR said.
Economists expect higher mortgage rates to lead to slower growth in house prices by the end of the year. Prices can be slow to react to changes in buyer activity, as sellers often wait weeks before lowering their list prices. Some buyers are also less sensitive to rising rates, such as cash buyers or those leaving high-cost markets for more affordable ones. Homes are typically under contract a month or two before contract close, so Q1 data largely reflects buying decisions made in late 2021 or early Q1.
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The ability of some households to work remotely continues to drive home buying demand. Millions of millennials are also aging into their best home-buying years.
The Punta Gorda, Florida metro area saw the largest increase in median price in the first quarter, up 34.4% from a year earlier.
After Punta Gorda, the Ocala, Florida metro area grew 33.8%, and Ogden, Utah grew 30.8%.
The only metro areas to see declines in the first quarter from a year earlier were Cape Girardeau, Mo., where median prices fell 2%, Topeka, Kan., down 1.9%, and Rockford, Ill., down 1%, the NAR mentioned. Prices remained unchanged in Bismarck, ND
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Write to Nicole Friedman at [email protected]
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