U.S. home prices are rising at an accelerating pace all over the country, data released Thursday by the National Association of Realtors show.
The median price of a single-family home climbed 14.9 percent to $315,000 in the fourth quarter.
The median sales price for existing homes in each of the 180 metro areas tracked by the NAR rose, the second widespread quarterly gain. This is the first time growth was seen in every metro area in back-t0-back quarters.
The housing boom is accelerating all over the country. One hundred and sixty-one metro areas, 88 percent of those tracked, experienced double-digit-percentage price increases, up from 115 metro areas with double-digit gains in the third quarter.
The Northeast saw the biggest price gains, with home prices rising 21 percent. Bridgeport in Fairfield County, Connecticut, which has seen an influx of people moving from New York City, saw prices rise 39.2 percent. Prices in New Jersey’s Atlantic City climbed 30 percent.
While home sellers have benefited from the fourth quarter price increases, NAR economist Lawrence Yun warned that the large rises in home prices could soon become detrimental to homebuyers.
“The average, working family is struggling to contend with home prices that are rising much faster than income,” he said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”
The Federal Reserve’s near zero interest rate target and its promise to keep rates low have led to extremely low mortgage rates, contributing to the demand for houses and pushing up prices.
The surge in demand for single-family homes caught the real estate professionals and home builders by surprise. Sales plunged in March and April, due to lockdowns and potential buyers staying away for fear of contracting the virus. The initial surge in May and June was mostly seen as arising from pent-up demand. But as the surge has continued into the winter months, it is now increasingly clear that this is a bigger secular change in the housing market.
Buyers are seeking out a respite from increasingly violent and deadly cities, where murders and shootings have exploded higher. Gun murders were up 31 percent in the United States in 2020. New York City, for example, finished 2020 with a 14-year high in shootings and a 40 percent increase in murders from the year before. This summer, New York and other cities were beset by riots, looting, and left-wing mobs demanding the defunding of police departments.
Schools and workplaces have also been shut down so that family members are working and learning from home. This puts a premium on space, feeding into demand for larger houses. Many people who once commuted five days a week expect to work only part-time from the office once the virus is contained.
Surging prices and demand are not luring Americans out of their homes. The number of homes for sale in December was 23 percent below December 2019’s inventory, down to just 1.07 million, the National Association of Realtors said. That is the lowest level in records going back to 1982.