Home prices rise across the country in the fourth quarter of 2023 MABA MassachusettsRealEstate FirstTimeHomeBuyers MaBuyerAgent

More than eighty five percent of metro areas in the United States posted home-price gains in the fourth quarter of 2023, according to a new report from the National Association of REALTORS® (NAR). Single-family home sales prices increased in one hundred and eight nine out of two hundred and twenty one metro areas analyzed, with the median single-family price in the country rising three point five percent year over year to $391,700. This is likely due to a healthy decrease in the thirty year fixed mortgage rate, which dropped from seven point seventy nine percent to six point sixty one percent.

Furthermore, fifteen percent of metro areas analyzed saw double-digit price gains, up from eleven percent in the third quarter. The greatest price increases were seen in Dayton, Ohio (up nineteen point nine percent); Kingsport-Bristol-Bristol, Tennessee-Virginia (up nineteen point two percent); Fond du Lac, Wisconsin (up eighteen point six percent); Trenton, New Jersey (up seventeen point three percent); Salinas, California (up seventeen point one percent); Newark, New Jersey-Pennsylvania (up sixteen point seven percent); Anniston-Oxford, Alabama (up fifteen point seven percent); Bloomington, Illinois (up fifteen point four percent); and Anaheim-Santa Ana-Irvine, California (up fourteen point eight percent).

“Homeowners have benefitted 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 NAR Chief Economist Lawrence Yun. “This doubling in housing costs for recent homebuyers is not included in the official consumer price index inflation calculations and contributes to the sense of dissatisfaction about the economy.”

The South saw the largest increase in existing single-family home sales, accounting for forty five percent of all sales in the U.S. The largest price increase, however, was in the Northeast, where prices jumped seven point three percent year over year, followed by the Midwest (up four point seven percent) and the West (up four point two percent). Less than fourteen percent of markets saw home price declines in the fourth quarter, down from seventeen percent in the third quarter.

Despite these widespread price increases, affordability improved slightly. The monthly mortgage payment on an existing single-family home with a twenty percent down payment decreased one point two percent to $2,163, down from $2,189 in the third quarter. However, that cost increased ten percent approximately $196 year over year. That means the typical family spent twenty six point one percent of their income on mortgage payments during the fourth quarter, down from twenty six point seven percent the previous quarter but up from twenty four point two percent in the fourth quarter of 2022.

For first-time buyers, affordability remained constraining. For typical starter homes, valued at $332,900 with a ten percent down payment, the monthly mortgage payment rose nine point eight percent year over year to $2,120. However, that cost decreased one point two percent from the third quarter. That means first-time buyers spent thirty nine point four percent of their income on mortgage payments during the fourth quarter, down from forty point three percent the prior quarter. Families still need a household income of at least $100,000 to afford a ten percent down payment in nearly half of all markets in the U.S.

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