Home prices in America keep rising at an astonishing pace, despite some signs that the red-hot housing market may finally be cooling off.
A new report from the National Association of Realtors (NAR) found that in the first quarter of 2022, 70% of the 185 major metro areas saw home prices grow by 10% or more over the past year.
Mortgage rates have risen sharply this year, but so far that doesn't seem to be reining in home prices much. Nationally, the median price of an existing single-family home (not new construction) jumped 15.7% to $368,200, according to NAR, and some cities saw much larger gains.
Here are the top 10 metro areas with the largest price gains over the past year, according to NAR. As you can see, half of the top 10 are in Florida.
- Punta Gorda, Florida (34.4%)
- Ocala, Florida (33.8%)
- Ogden-Clearfield, Utah (30.8%)
- Lakeland-Winter Haven, Florida (30.1%)
- Decatur, Alabama (28.9%)
- Tampa-St. Petersburg-Clearwater, Florida (28.8%)
- Fort Collins, Colorado (28.4%);
- North Point-Bradenton-Sarasota, Florida. (28.0%)
- Myrtle Beach-Conway-North Myrtle Beach, North Carolina-South Carolina (28.0%)
- Salt Lake City, Utah (27.9%)
NAR Chief Economist Lawrence Yun said price gains in these smaller cities mostly in the Sun Belt are now larger than those in larger metro areas like New York, San Francisco or Seattle. "This is due to buyers looking for less expensive housing and also a result of more opportunities to work from home," Yun added, "making relocation to smaller markets possible."
When will home prices fall?
With mortgage rates now soaring above 5%, it seems like everyone is wondering when home prices will start to swing the other way. Higher mortgage rates have pushed the typical monthly mortgage payment up nearly 40% over the last year, according to data from real estate brokerage Redfin.
In light of higher costs for homeowners, some buyers will probably start to drop out of the market to wait until houses become more affordable again. Last week, Redfin Chief Economist Daryl Fairweather estimated that “the number of buyers willing to pay such high mortgage payments could evaporate by late summer.”
But because there is still an extreme shortage of inventory, a drop in buyer interest might not necessarily be enough to push prices down. According to NAR’s Yun, prospective buyers shouldn’t hold their breath for lower prices just yet.
"Given the extremely low inventory,” he said, "we're unlikely to see price declines.” Yun added, however, that price growth "should slow in the coming months."