BAM Key Details: 

  • NAR’s latest quarterly report shows nearly 9 in 10 metro areas experienced home price gains in the fourth quarter of 2022. 
  • The national median single-family home price rose 4.0% year over year to $378,700. 
  • The monthly mortgage payment on a typical single-family home with a 20% down payment increased by 58% year over year to $1,969. 

According to the latest quarterly report from NAR, roughly 9 in 10 U.S. metro areas—166 of 186—experienced home price gains in the fourth quarter of 2022, despite mortgage rates topping 7%. 

The national median single-family home price increased 4.0% year-over-year to $378,700, showing a slowdown in annual appreciation compared to the previous quarter’s 8.6%.

Less than a fifth (18%) of metro markets saw double-digit annual price appreciation, compared to 46% in the previous quarter. 

A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42% in the past three years.

Lawrence Yun

NAR Chief Economist

Housing cost increases outpace wage growth and consumer price inflation

The monthly mortgage payment on a typical single-family home, assuming a 20% down payment, increased year-over-year by 58% to $1,969. 

These increases in housing costs have far exceeded the wage increases and consumer price inflation of 15% and 14%, respectively, that we’ve seen since 2019. 

The South, among the major U.S. regions, saw the largest share of single-family existing-home sales (45%) in Q3 2022, with annual price appreciation ranking second on the list of regional appreciation rates. 

  • Northeast: 5.3%
  • South: 4.9%
  • Midwest: 4.0%
  • West: 2.6%

Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply. Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.

Lawrence Yun

NAR Chief Economist

The top 10 metros with the largest annual home price increases

The top 10 U.S. metros with the steepest annual price increases all saw home price gains of at least 14.5%. Seven of those markets were in Florida and the Carolinas. 

  1. Farmington, NM: 20.3%
  2. North Port-Sarasota-Bradenton, FL: 19.5%
  3. Naples-Immokalee-Marco Island, FL: 17.2%
  4. Greensboro-High Point, NC: 17.0% 
  5. Myrtle Beach-Conway-North Myrtle Beach, SC–NC: 16.2%
  6. Oshkosh-Neenah, WI: 16.0%
  7. Winston-Salem, NC: 15.7% 
  8. El Paso, TX: 15.2%
  9. Punta Gorda, FL: 15.2%
  10. Deltona-Daytona Beach-Ormond Beach, FL: 14.5%

Half of the top 10 most expensive U.S. markets were in California: 

  1. San Jose-Sunnyvale-Santa Clara, CA: $1,577,500; -5.8%
  2. San Francisco-Oakland-Hayward, CA: $1,230,000; -6.1%
  3. Anaheim-Santa Ana-Irvine, CA: $1,132,000; -1.6%
  4. Urban Honolulu, HI: $1,090,200; 3.4%
  5. San Diego-Carlsbad, CA: $857,000; 1.4%
  6. Los Angeles-Long Beach-Glendale, CA: $829,100; -1.3%
  7. Naples-Immokalee-Marco Island, FL: $802,500; 17.2% 
  8. Boulder, CO: $759,500; -2.0%
  9. Seattle-Tacoma-Bellevue, WA: $708,900; 1.3%
  10. Barnstable Town, MA: $668,100; 4.0%

Approximately one in 10 markets (11% or 20 of 186) saw home prices decline in Q4 2022. 

A few markets may see double-digit price drops, especially some of the more expensive parts of the country which have also seen weaker employment and higher instances of residents moving to other areas.

Lawrence Yun

NAR Chief Economist

Monthly housing costs are “unaffordable” for the typical household

In the fourth quarter, mortgage rates that were roughly twice what they were at the start of 2022, along with elevated home prices, exacerbated housing affordability. 

The monthly mortgage payment for a typical single-family home with a 20% down payment had reached $1,969—up 7% from the third quarter’s $1,838 and 58% (or $700) higher than a year ago (Q4 2021). 

In the fourth quarter of 2022, families typically spent 26.2% of their household income on monthly mortgage payments—up from 25% in the previous quarter and 17.5% one year ago. 

The growing unaffordability of housing made it increasingly difficult for first-time buyers to afford the monthly payment for a single-family home. Even a typical starter home valued at $321,900, with a 10% down payment loan, would set them back $1,931 a month—roughly 7% more than the previous quarter’s $1,806 and 57% (or almost $700) more than one year ago ($1,233). 

First-time home buyers typically spend a whopping 39.5% of their household income on mortgage payments—up from 37.8% in the previous quarter. 

For context, a mortgage payment is considered “unaffordable” if it amounts to more than 25% of household income. For many Americans, 25% is a dare-to-dream situation. 

A family would need a minimum qualifying income of $100,000 to afford a 10% down mortgage (and its resulting monthly payment) in 71 markets—up from 59 in the previous quarter. 

In 16 markets—down from 17 in Q3 2022—a family would need a minimum qualifying income of $50,000 to afford a home. 

Given that, it’s hardly surprising that many young adults choose to live with family (if they can) to save up for a larger down payment and buy down their mortgage rate.

Top takeaways for real estate agents

Given how much more home buyers have to pay each month on a typical home, even with a 20% down payment (let alone 10% or less), it’s all the more important to provide your clients and prospects with the information they can use to save money on their home purchase. 

It also drives home the importance of knowing the mortgage lenders in your area, cultivating relationships with at least two or three, and having daily conversations with them

You want to know what your clients can expect when they meet with a lender you know they can trust—and what they can bring to their first conversation with that lender—so they can get the best possible deal on their home purchase.