Home Price Gains Continued to Impact Affordability in Q4 2022

Washington, DC, February 17, 2023-Approximately nine out of 10 metro markets registered home price gains in Q4 2022 despite mortgage rates eclipsing 7%, according to the National Association of Realtors’ latest quarterly report. 

Eighteen percent of the 186 tracked metro areas registered double-digit price increases over the same time period, down from 46% in the third quarter of 2022.

Compared to a year ago, the national median single-family existing-home price rose 4.0% to $378,700. Year-over-year price appreciation decelerated when compared to the previous quarter’s 8.6%.

Among the major U.S. regions, the South saw the largest share of single-family existing-home sales (45%) in Q3, with year-over-year price appreciation of 4.9%. Prices grew 5.3% in the Northeast, 4.0% in the Midwest, and 2.6% in the West.

The top ten metro areas with the largest year-over-year price increases all recorded gains of at least 14.5%, with seven of those markets in Florida and the Carolinas. Those include Farmington, New Mexico (20.3%); North Port-Sarasota-Bradenton, Florida (19.5%); Naples-Immokalee-Marco Island, Florida (17.2%); Greensboro-High Point, North Carolina (17.0%); Myrtle Beach-Conway-North Myrtle Beach, South Caronlina-North Carolina (16.2%); Oshkosh-Neenah, Wisconsin (16.0%); Winston-Salem, North Carolina (15.7%); El Paso, Texas (15.2%); Punta Gorda, Florida (15.2%); and Deltona-Daytona Beach-Ormond Beach, Florida (14.5%).

Half of the top ten most expensive markets in the U.S. were in California, including San Jose-Sunnyvale-Santa Clara, California ($1,577,500; -5.8%); San Francisco-Oakland-Hayward, California ($1,230,000; -6.1%); Anaheim-Santa Ana-Irvine, California ($1,132,000; -1.6%); Urban Honolulu, Hawaii ($1,090,200; 3.4%); San Diego-Carlsbad, California ($857,000; 1.4%); Los Angeles-Long Beach-Glendale, California ($829,100; -1.3%); Naples-Immokalee-Marco Island, Florida ($802,500; 17.2%); Boulder, Colorado ($759,500; -2.0%); Seattle-Tacoma-Bellevue, Washington ($708,900; 1.3%); and Barnstable Town, Massachusetts ($668,100; 4.0%).

Roughly one in ten markets (11%; 20 of 186) experienced home price declines in Q42022.

Once again, first-time buyers looking to purchase a typical home during Q4 2022 encountered challenges related to housing’s growing unaffordability. For a typical starter home valued at $321,900 with a 10% down payment loan, the monthly mortgage payment rose to $1,931, about 7% more than the previous quarter ($1,806) and an increase of almost $700, or 57%, from one year ago ($1,233). First-time buyers typically spent 39.5% of their family income on mortgage payments, up from 37.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.2

A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 71 markets, up from 59 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 16 markets, down from 17 in the previous quarter.