The U.S. real estate market continued to show resilience in the second quarter of 2024, with nearly 90% of metro areas registering home price gains. According to the National Association of Realtors' latest report, 199 out of 223 tracked metro markets (89%) experienced price increases during this period. Notably, the New York metro region emerged as a leader in this upward trend, with two of its market areas ranking among the top 10 for price increases.
NY Metro Region's Strong Performance
The New York-Jersey City-White Plains, NY-NJ area and Dutchess County-Putnam County, NY, secured the 7th and 9th spots, respectively, on the list of metro areas with the largest year-over-year price gains. These regions saw substantial home price growth, reflecting the ongoing demand for housing in the greater New York area despite the challenges posed by rising mortgage rates.
Nationwide Trends: A Mix of Gains and Challenges
While the New York metro area showed significant growth, the report highlighted a nationwide trend of slowing price gains. Only 13% of metro areas experienced double-digit price increases in the second quarter, a decline from 30% in the first quarter. The national median single-family existing-home price grew by 4.9% year-over-year, reaching $422,100.
Among U.S. regions, the South continued to lead in single-family existing-home sales, accounting for 45.5% of the market with a year-over-year price appreciation of 2.3%. Meanwhile, the Northeast saw prices bounce by 9.8%, followed by the Midwest at 5.5% and the West at 5.4%.
The Impact of Rising Mortgage Rates
The increase in home prices has been accompanied by rising mortgage rates, which ranged from 6.82% to 7.22% in the second quarter. This has led to a significant rise in monthly mortgage payments. For instance, the monthly mortgage payment on a typical existing single-family home with a 20% down payment increased to $2,262, up 11.1% from the first quarter.
First-time homebuyers have been particularly affected, with affordability conditions worsening as inventory remains limited. The monthly mortgage payment for a typical starter home rose to $2,218, up 11.1% from the previous quarter, making it increasingly difficult for first-time buyers to enter the market.
Looking Ahead: Will Affordability Improve?
Despite the current challenges, there is some optimism on the horizon. NAR Chief Economist Lawrence Yun predicts that housing affordability may improve in the coming months. As mortgage rates have started to decline and more supply reaches the market, the income required to purchase a home is expected to decrease, potentially easing the burden on prospective buyers.
The second quarter of 2024 has been a dynamic period for the U.S. real estate market, with significant price gains in many metro areas, including the New York region. However, rising mortgage rates and affordability challenges continue to shape the landscape. As we move into the latter half of the year, all eyes will be on how these factors evolve and influence the market.
