Home prices rise in 80% of US metros during Q2

Home prices increased in 80% of U.S. metropolitan areas during the second quarter as home sales continued to rise despite higher mortgage rates, according to a new report from the National Association of Realtors.

The trade group's quarterly report found the national median price for an existing single-family home rose 1.5% from a year earlier to $434,900. That marked an acceleration from the 0.5% annual gain recorded during the first quarter.

The percentage of metro areas posting year-over-year price increases climbed from 71% in the first quarter to 80% in the second quarter. About 5% of markets recorded double-digit price gains, unchanged from the previous quarter.

NAR chief economist Lawrence Yun said the increase in sales despite rising borrowing costs reflects underlying demand supported by employment and wage growth.

"Home sales increased despite mortgage rates rising," he said in a statement. "This testifies to the potential housing demand building up from steady job and income gains."

Yun said sales increased in three of the nation's four regions, led by the South, where stronger job growth helped drive activity. The Northeast was the lone exception, as slower employment growth and faster-rising home prices weighed on affordability.

The West was the only region to post a year-over-year decline in median home prices, falling 0.8% to $637,900. Prices rose 3.8% in the Northeast to $547,200, 3.6% in the Midwest to $340,800, and 1% in the South to $380,000, according to NAR.

Among the nation's largest metro areas, Beaumont-Port Arthur, Texas, posted the strongest annual price increase at 11%, followed by Naples-Immokalee-Marco Island, Fla., at 10.5% and Gulfport-Biloxi-Pascagoula, Miss., at 10.3%.

California continued to dominate the list of the nation's most expensive housing markets.

The San Jose-Sunnyvale-Santa Clara metro area remained the costliest, with a median existing single-family home price of $2.05 million despite a 4.2% annual decline, the report found.

The San Diego-Carlsbad metropolitan area ranked as the nation's fifth-most expensive housing market, with a median existing single-family home price of $1.075 million, up 4.9% from a year earlier. Only the San Jose, San Francisco-Oakland-Hayward, Anaheim-Santa Ana-Irvine and Urban Honolulu metro areas had higher median prices, NAR said.

The report also found affordability weakened from the first quarter as mortgage rates increased. The monthly mortgage payment on a typical existing single-family home purchased with a 20% down payment rose to $2,199, an increase of $219 from the previous quarter. That payment represented 23.8% of the median family's income, up from 21.8% in the first quarter but down from 25.5% a year earlier.

For first-time buyers, the monthly payment on a typical starter home rose to $2,158, consuming 35.9% of household income, compared with 32.9% in the first quarter.

Despite affordability pressures, Yun said income growth has continued to outpace home-price appreciation.

"It is welcoming to see incomes rising faster than home prices, which has helped boost affordability," Yun said. "But the big short-term challenge to affordability is coming from rising mortgage rates."