Q4 home prices continue to increase, but at a slightly slower pace than Q3
Home prices continued to rise in the fourth quarter of 2021. According to the latest quarterly report from the National Association of Realtors® (NAR), saw double-digit home price increases in two-thirds of the country—67% of 183 metro areas nationwide. That actually represents a slight slow down from Q3, which saw double-digit increases in 78% of metro areas.
Nationwide, the median single-family existing-home price rose 14.6% year-over-year to an average of $361,700. In Q3, the pace of increase was 15.9% year-over-year, so this represents a slight slow down in the increase.
Increasing prices across the country
The South saw the biggest increase in average home prices—17.9%. This was the only region to see double-digit increases on its own, followed by the Midwest (8.6% increase), West (7.7%) and finally the Northeast (6.8%).
"Homebuyers in the last quarter saw little relief as home prices continued to climb, albeit not as fast as earlier in the year," said Lawrence Yun, NAR’s chief economist. " The increasing prices are indicative of a seller's market, with an abundance of eager buyers and very limited supply."
Sun and warmer temperatures seemed to help home prices grow, as the markets with the highest increases were mostly in the Sunbelt and Southwestern states:
- Punta Gorda, Fla. (28.7%)
- Ocala, Fla. (28.2%)
- Austin-Round Rock, Texas (25.8%)
- Phoenix-Mesa-Scottsdale, Ariz. (25.7%)
- Sherman-Denison, Texas (25.1%)
- Tucson, Ariz. (24.9%)
- Las Vegas-Henderson-Paradise, Nev. (24.7%)
The most expensive parts of the country also saw a surge of price increases as many of them maintained their title as the priciest markets with double-digit increases as well:
- Anaheim-Santa Ana-Irvine, Calif. (23%)
- Naples-Immokalee-Marco Island, Fla. (21.2%)
- San Jose-Sunnyvale-Sta. Clara, Calif. (19.6%)
- Boulder, Colo. (17.2%)
- Urban Honolulu, Hawaii (16.8%)
- Los Angeles-Long Beach-Glendale, Calif. (15.9%)
- San Francisco-Oakland-Hayward, Calif. (14.9%)
- San Diego-Carlsbad, Calif. (14.2%)
- Seattle-Tacoma-Bellevue, Wash. (13.9%)
Squeezing out first time homebuyers
As you may imagine, these skyrocketing prices across the country are making it hard on first time homebuyers to enter the market. Add to that fact that mortgage rates have been increasing and seem poised to maintain an upward trajectory, this is a difficult time to purchase a home.
"The strength of price gains are associated with the strength of the local job market, but the escalating prices took a toll on home shoppers, compelling many to come up with extra cash, and forcing others to delay making a purchase altogether," said Yun. "A number of families, especially would-be first-time buyers, are increasingly being forced out of the market, and this is why supply is critical to expanding homeownership opportunity.
"The good news is that home prices should begin to normalize later in 2022 as more homes come on the market," Yun added.
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