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“The fourth quarter of 2020 presented favorable circumstances for rising house prices,” said Lawrence Yun, chief economist of NAR. “Mortgage rates have reached historically low levels, pushing up demand,” he said. “At the same time, inventory levels have also reached record levels, leading to gloomy and insufficient inventory conditions in the fourth quarter.”
This meant that a monthly mortgage payment on a typical single-family home (which is not new construction) rose to $ 1,040 from $ 1,020 a year ago, while the family income needed to afford a house increased to $ 49,908, up from $ 48,960 a year ago.
All regions of the country saw double-digit year-over-year price growth. The Northeast recorded the largest gain with 21%, followed by the West with 16%, the Midwest with 15% and finally the South with 14%.
The metropolitan areas with the largest increases in house prices were concentrated in the Northeast and Florida, with Idaho and Washington also registering large increases.
The biggest winners were Bridgeport, Connecticut, up 40%; Pittsfield, Massachusetts, up 32%; Atlantic City, New Jersey, up 30%; Naples, Florida, up 30%; Barnstable, Massachusetts, up 29%; Crestview, Florida, up 29%; Boise City, Idaho, up 27%; Binghamton, New York, up 24%; Kingston, New York, up 24%; and Spokane, Washington, up 24%.
Vacation destinations like Atlantic City, Naples and Barnstable on Cape Cod appeared to be popular, as well as more affordable small towns within driving distance of major cities, like Binghamton and Kingston in New York City, according to NAR.
“Although tourism overall has taken a hard hit throughout 2020, our data shows that vacation homes have consistently performed well in terms of sales,” Yun said. “Many people bought in these areas because they found themselves with new freedoms to work from home.”
The most expensive region in the country was San Jose, California, with a median selling price of $ 1.4 million. This was followed by San Francisco, at $ 1.14 million; Anaheim, Calif., At $ 935,000; Honolulu, at $ 902,500; San Diego, at $ 740,000; Los Angeles at $ 688,700; Boulder, Colorado at $ 661,300; Seattle at $ 614,700; Nassau County, New York, $ 591,600; and Boston at $ 579,100.
These more expensive markets all saw double-digit growth in median sales of existing single-family homes in the fourth quarter, with the exception of Boulder.
Home sellers have seen the price increases. But these sharp price swings could soon discourage new buyers.
“The average working family is struggling to cope with house prices that are rising much faster than income,” Yun said. “It prevents a consumer from becoming an actual buyer, which causes them to lose the wealth accumulated by homeownership.”
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